Photo - Richard Hall, MD, Nielsen Malaysia.
According to market survey firm Nielsen, though Malaysian consumer confidence ranks ninth among 58 countries measured, it has declined six points in the index during the third quarter of 2012. Confidence levels on job prospects and personal finances have declined by five and seven percent.
"Despite having inflation grow at its slowest pace in the month of September as well as having the Gross Domestic Product (GDP) grow by 5.4 percent in the second quarter, the third quarter Consumer Confidence Index in Malaysia actually decreased by six points due to the drop in optimism based on job prospects as well as personal financial status," said Nielsen Malaysia managing director, Richard Hall. "Although domestic conditions remain stable, consumers may have increasing concerns that external demand and investments may not be as resilient as expected and the economic situation in Europe, North America and the slowing down of demand in China may be contributing to the decline in optimism."
Hall said that Malaysia reported the ninth highest consumer confidence index score (ahead of Switzerland) among the 58 countries surveyed. Indonesia and India are both at the top (119), followed by The Philippines (118). Malaysia ranked fifth in the second quarter of 2012.
The percentage of online respondents in Malaysia who rated their job prospects as excellent and good over the next 12 months is at 65 percent despite a drop of five percent quarter-on-quarter; three out of 10 (31 percent) described it as "not so good" or "bad". Malaysia has the sixth highest ranking on job prospects among the 58 countries surveyed, he said.
"Overall, confidence level (excellent and good) towards personal finances in the coming 12 months experienced a seven percent quarterly decline. Seven percent of consumers surveyed online described their state of personal finances as excellent as compared to 10 percent a quarter ago," said Hall.
The Nielsen Global Online Consumer Confidence Survey, established in 2005, tracks consumer confidence, major concerns and spending intentions among more than 29,000 Internet consumers in 58 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.
Hall said that Malaysian consumers are split between saying the country is in a recession or not. "Half (51 percent) of the online consumers surveyed felt that the nation is in an economic recession, half (49 percent) said that Malaysia is not in recession. Slightly more than a quarter (27 percent) of the respondents projected that the recession would last for another 12 months. In addition, four out of five (80 percent) consumers have changed their spending patterns to save on household expenses and this can be seen in spending on FMCG sales in Malaysia over the last quarter."
FMCG sales during the fasting period and Raya festive month were lower than expected, he added. "Despite the peaks of purchase resulting from the Hari Raya festivities, celebrated by a large majority of the country's population, the total Fast Moving Consumer Goods (FMCG) tracked by Nielsen also showed a year-on-year decline of 3.1 percent and 2.4 percent in sales value during the fasting period and the festive month respectively (July and August 2012). Only 36 categories experienced positive growth in July and August."
"The trends suggest that consumers are spending cautiously and holding back spending amid global economic uncertainties," said Hall. "On the other hand, Nielsen's survey reveals that they have increased both their contribution to savings and retirement funds (increased by three and five percent respectively). Pre-budget sentiment may have also contributed to the slowdown in growth on a year-on-year basis. Consumers are deferring spending especially on discretionary items such as major durable goods while waiting for people-friendly incentives or measures."
"Nearly one-fifth (18 percent) of online consumers indicated that the state of economy is still their biggest concern," he said. "Consumers remained concerned about job security (14 percent) and political stability (11 percent) while work/life balance and debt followed closely. Concerns over worries of increasing food prices maintained its sixth position as inflation grew at its slowest pace in the country in the months of July-September in 2012."
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted 10 August - 7 September 2012 and polled more than 29,000 online consumers in 58 countries throughout Asia Pacific, Europe, Latin America, the Middle East, Africa and North America.
Sign up for CIO Asia eNewsletters.