South Africa’s consumer confidence improved slightly in the first quarter of 2014 albeit remaining close to a decade low, suggesting that a strong growth in consumer spending cannot be expected at least in the near term, a survey carried out by First National Bank (FNB) and the Bureau for Economic Research (BER) showed. The FNB/BER consumer confidence index (CCI) edged up to -6 in Q1 2014 from -7 in Q4 2013 and remained marginally higher than a decade low of -8 reached in Q3 2013. It was significantly below the 20-year average of +6 and was also below the level of -4, registered during the height of the 2008 global financial crisis.

The FNB/BER CCI measures consumers’ expectations for their own financial positions and the country’s economic development, as well as their perception of the appropriateness of the present time to buy durable goods, such as furniture, appliances and electronics.

In Q1, the economic outlook sub-index improved to -9 from -15, suggesting that, while consumers remain pessimistic about South Africa's economic prospects, a smaller percentage of them now expect the situation to worsen over the next 12 months.

Consumers’ rating of their own financial prospects remained unchanged at +8, but their estimation of the appropriateness of the present time to buy durable goods dropped to -17 from -14, reaching the lowest level since the 2009 recession. This can be explained with the rise in interest rates since January, coupled with tightening credit conditions and the continuous weakening of the rand.

According to Sizwe Nxedlana, chief economist of FNB, consumer spending is expected to continue to grow at a “pedestrian pace” in 2014, but a “further dramatic deterioration in household expenditure is not expected.”