Growth is good, but not good enough
The Consumer Confidence Index rose by 5.3 points in January 2013 to 79.7 points.
The Consumer Confidence Index, compiled by Globes Research and pwc Israel, rose by 5.3 points in January 2013 to 79.7 points (baseline 100 = 1996), after falling by the same amount in December 2012, and rising by 2.3 points in November. The index rose against the backdrop of the elections for the 19th Knesset, and now that they are behind us, the index is back at its level in the fourth quarter of 2012, although below its level in the first quarter of last year.
In three-month moving trend figures, the Consumer Confidence Index rose by 0.8 points in January, after rising by 3.7 points in December and 4.9 points in November. In general, the index shows some recovery in consumer confidence from the low point reached in the third quarter of 2012. However, the January poll, conducted by the Smith Institute, was held before Governor of the Bank of Israel Prof. Stanley Fischer announced his resignation, and amidst reports on planned austerity measures.
The Consumer Confidence Index comprises three questions: "What in your opinion is the current state of the economy?"; "What will be the state of the economy in six months' time?"; and "What will be your personal economic situation in six months' time?"
For each question, "Globes" takes the proportion of optimists, deducts the proportion of pessimists, and thus obtain what is called "the net balance of optimism". If, for example, 40% of the respondents in the survey estimate that their situation will be better in six months' time, and 50% estimate that it will be worse, the net balance is ten percentage points.
In January, consumers' expectations about the economic situation in six months rose sharply, continuing the strong volatility in the public's expectations that has lasted for quite some time. The net balance of optimism rose by 10.5 points to minus 20.5 points in January, after falling 10.1 points in December and rising 10.6 points in November. The trend figure rose by 3.7 points in January, after rising 4.7 points in December and 7.5 points in November.
Consumers' expectations about their personal economic situation in three months also rose sharply in January. The net balance of optimism rose to 7.9 points from minus 1.4 points in December and plus 1.8 points in November. The trend figure rose by 1.5 points in January, after rising 2.2 points in December and 5.5 points in November. The steady rise in the trend figure in recent months and the strong gain in the current figure for January suggest the possibility of a turnaround, after months of heightened pessimism about the economy. The trend figure has risen 10.2 points since September.
However, in contrast to the responses about the future, the net balance of optimism about the current economic situation fell by 3.3 points in January to minus 33.2 points, after falling by 2.5 points in December and by 2.1 points in November. The drop in this component of the index also stood out in January compared with consumers' expectations about the future.
The trend figure for responses about the current economic situation fell by 2.7 points in January, after rising by 2.9 points in December and by 2 points in November. The figure fell to minus 30.2 points in January from minus 34.9 points in September.
The expanded Consumer Confidence Index, which includes a fourth question about the labor market, rose to 74.6 points in January from 68.2 points in December and 74.2 points in November, and compared with 75.1 points in January 2012. Favorable responses about the situation in the labor market in six months boosted the expanded index by more than the regular index in January.
Published by Globes [online], Israel business news - www.globes-online.com - on February 11, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
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