Consumer confidence a good retail sales indicator

The current level of consumer confidence points to a stable retail environment during the second half of 2010, Stanlib economist Kevin Lings said Monday.

His comments follow the release of the FNB/BER's (Bureau for Economic Research) consumer confidence index, which added one point to 15 in the third quarter from 14 in the second quarter.

Retail trade sales jumped by a strong 7.4% year-on-year (y/y) in June, the highest level recorded this year. The rise was mainly on the back of retail activity during the 2010 FIFA Soccer World Cup.

Several factors such as low inflation and a 600 basis point cut in interest rates since December 2008 have helped consumers. High debt levels and unemployment are however offsetting the gains.

Lings said that although confidence levels have remained virtually unchanged this year, the overall level of confidence was well above the long-term average of just two index points, a suggestion that consumer confidence was solid but unexciting.