The Israel Consumer Confidence Index fell below 70 points for the first time in four years. The index dropped to 69.2 points in August, its lowest point since February 2004.
The Consumer Confidence Index has been falling since the third quarter of 2007, even before there were signs that the economy was entering a slowdown. The index indicates that the public has sensed the economic trends for a long time, even as official macroeconomic data only now shows declines in private consumption and slower growth.
The drop in the Consumer Confidence Index in August follows the 3.4-point drop in July. Most of the decline is due to worsening public assessments about the current and future economic conditions. The decline in assessments about people's personal economic situation in six months was more moderate.
The Consumer Confidence Index is compiled by Globes Research and Kesselman and Kesselman - PricewaterhouseCoopers Israel. An analysis of the figures by Globes Research indicates steady erosion in consumer confidence, albeit not to the point of collapse. The index suggests that private consumption will continue to decline through the fourth quarter of 2008 and first quarter of 2009, even though there are no signs that a slowdown will lead to an economic contraction.
As for the job market, even though the latest figures show that the unemployment rate has fallen to 5.9%, the public is still worried. The expanded Consumer Confidence Index, which includes employment expectations, fell by 2.6 points in August, after falling 4.7 in July.
The picture is mixed as far as purchases by the public is concerned. Although planned purchases of durable goods rose slightly in August, after falling in July, planned purchases of apartments and cars fell.
The full Consumer Confidence Index (in Hebrew) is available at Consumer Confidence Index - August 2008.
Published by Globes [online], Israel business news - www.globes-online.com - on September 3, 2008
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