Consumers' cash flow improves in Q1 2012: BMR

According to the index, consumers' perception of their cash flow position recovered to the best level since the launch of the index in the second quarter of 2009.

The overall index improved to 4.11 points in the first quarter from 4.33 points in the fourth quarter of 2011, showing progress towards financial security.

The index, done in partnership with MBD Credit Solutions, was constructed from four sub-indices of income, expenditure, debt servicing, and savings vulnerability.

Despite the improvement in the cash flow, consumers were not yet classified as financially secure. On average, they were still classified as reasonably financially vulnerable.

Consumers' expenditure vulnerability on average improved from a state of vulnerability in the fourth quarter of 2011 to one of financial security in the first quarter of 2012.

However, consumers regressed with regard to debt servicing from a position of security to reasonably vulnerable.

Sentiment improved with regard to expenditure, and was attributed to a number of factors including an increase in employment and job creation resulting in increased income earned; and a shift from capital expenditure to consumption expenditure, which made consumers more content in respect of their ability to satisfy their consumption needs.

Savings vulnerability also showed some improvement, but the BMR warned it should be treated with caution as it did not necessarily mean that consumers were saving more.

Rather, it indicated that consumers were feeling that the state of their cash flow had improved to such extent that they were in a better position to save and therefore reflect lower vulnerability toward saving.