Consumer confidence index stable: Danareksa

JAKARTA (JP): The consumer confidence index, made up of the present situation index and the expectations index, showed little movement in December, according to a survey by the Danareksa Research Institute.

The index was at 56.4 in December, up slightly from the 56.8 the previous month. The increase in the expectations index, from 70.1 to 71.8, offset a decrease in the present situation index, which went from 38.9 to 36.0.

These movements highlight the people's optimism that the current conditions will give way to improved economic prospects, Danareksa said in its report.

The respite that the consumer confidence index found in the last two months has not led to a reversal in its fortunes, with a downward trend still evident. The index, which has steadied over the last two months, continues to display an erosion of confidence, the report said.

It said that the downward trend suggested that people faced more downside in the present situation despite better expectations for the future.

"It will be interesting to see if a brighter future emerges to justify the people's optimism in the economy or if their expectations are dashed," it added.

The higher expectations index reflects people's anticipation of two major changes in the economy.

Most people expect the economy to move from a "bad state" to a "normal state", the report said.

This expectation of improvement will generate additional demand for labor, and as a result an improved job market. Survey respondents expected that "jobs will be not so plentiful" in the next six months, an improvement from their view that jobs are "hard to get" at present.

Currently, although the local economy appears normal, most people believe it is in bad shape. Respondents were more convinced in December as compared to November that jobs "are hard to get".

The index measuring job security dropped from 84.8 to 81.8, and it is the perceived difficulty of finding a job that has dragged down the present situation index.

Regardless of the poor current conditions, consumers remained confident that things are getting better, Danareksa said. "They are even more convinced that local economic conditions remain unchanged and that overall economic conditions are not as bad as in the previous month."

This more optimistic assessment leads them to hold brighter expectations for the next six months.

"With higher optimism that family income and local economic conditions will remain unchanged, they had higher confidence that the economy is moving to a normal state, where there is no major change in the economy," it said.

The percentage of consumers who have no plan to purchase durables decreased from 73.2 percent in November to 70.6 percent in December. (05)