Consumers feel more confident about economy

JAKARTA (JP): The consumer confidence index rose to 56.8 from 52.2 on the back of stronger confidence in the economy in the reporting month and its prospects in the coming six months.

According to a survey of consumer confidence conducted for the Danareksa Research Institute by AC Nielsen, the increased confidence tempers, but does not reverse, the downtrend of the index over the last six-month period in the absence of a substantial easing of the tensions within the country.

In fact, confidence in the government continued to deteriorate in November. It is therefore too early to conclude the present uptrend is sustainable. The volatility of this index over the past six months underpins this fragility.

The survey is based on face-to-face interviews of at least 1,700 Indonesian households across six main areas of the country.

In November, consumers felt aspects of the economy, both local and national, were better than expected, with the economy growing and the job market expanding.

With current sentiment less pessimistic and expectations revised upward, consumers are more confident of the growth of the national and local economy and the job market, and the prospects for their family incomes over the next six months. They have greater confidence that things are growing and that this growth will continue.

Nonetheless, consumers with income levels above Rp 1 million (US$107 at November's average exchange rate of Rp 9,351 per dollar) a month are less confident in the economy's recovery.

On the contrary, consumers with income levels of less than Rp 1 million have greater confidence the economy will grow.

All consumers are more optimistic of their management of cash flow in terms of household income and expenses. However, the elderly (60 and above) are more pessimistic in their assessment of the economy.

By province, consumers from Central Java, East Java, North Sumatra and South Sulawesi are more confident in the prospects for the economy in November and the coming six months.

Confidence in the economy eroded in Jakarta and West Java, especially in their view of economic growth in November. Consumers from both these provinces were more pessimistic in their assessments of the economy, with a plunge in confidence (from 24.8 to 17.1) in West Java underscoring the skepticism of an economic revival.

Confidence in urban and rural areas improved in November, with assessments of the present situation less pessimistic and expectations for the future more optimistic.

Laborers and job seekers were optimistically confident, but the confidence level of self-employed breadwinners went from pessimistic to optimistic.

Looking ahead over the next six months, consumers have lees confidence in price stability, with most of them expecting prices to rise. They also believe interest rate hikes are more likely.

Consumers are less confident in exchange rate stability, with most of them unable to say where the rupiah is heading. With regard to the stock market, respondents are more confident the composite price index will edge up.

Confidence in the government continued to slump, with consumers now pessimistic in their assessment of the government. This was the sentiment in all regions except South Sulawesi dropped, with the largest fall in North Sumatra. Both urban and rural areas showed a decline in confidence, with rural consumers still optimistic and urban consumers pessimistic. Discontent with the government also was found among educated and wealthier respondents.(03)