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Consumer Confidence
Consumer Confidence November 2020
November 05, 2020 14:10

October 2020 Consumer Confidence: Weakening Further

I. Consumer Confidence Index (CCI) Danareksa’s Consumer Confidence Index (CCI) fell for two straight months in October 2020 to 71.1 from 73.3 in the previous month. The weakening of the CCI is mainly a reflection of limited job opportunities and the relatively slow recovery of economic conditions. o The two main components of the CCI declined: the Present Situations Index (PSI) dropped by 6.5 percent mom to 36.3 and the Expectations Index (EI) fell 2.1 percent mom to 97.2. The domestic economy continues to improve at a slow pace although the disbursement of the social protection program has been accelerated. o In our survey, the proportion of consumers who stated that current economic conditions were “bad” rose from 74.8 percent to 76.7 percent. At the same time, the proportion of consumers who stated that current economic conditions were “good” declined from 5.0 percent to 3.4 percent. The impact of the Covid-19 outbreak in Indonesia has been felt greatly by consumers, as reflected in the decline in the CCI again after rising in August 2020. o Looking ahead, consumers are less upbeat on the national economic outlook and the job market. The proportion of consumers who expect that jobs will be “hard to get” increased from 75.2 percent to 77.3 percent. Job termination due to the spread of Covid-19 is still a major worry for many consumers. Furthermore, the proportion of consumers expecting better family incomes over the next six months decreased by 1.4 percent to 75.1. Nonetheless, the proportion of consumers who expect family incomes to “decline” dropped from 36.3 percent to 35.7 percent. The weaker family income expectations were most pronounced among middle-income consumers while lower income consumers expect an improvement. This increase in confidence among lower income consumers reflects the impact coming from the disbursement of cash via social protection programs.

Consumer confidence weakened in urban and rural areas. The CCI fell by 3.2 percent mom to 70.3 for urban consumers, and declined by 2.7 percent mom to 73.0 for rural. By province, the CCI fell in three provinces: South Sulawesi (-12.2 percent mom to 68.3), West Java (-9.5 percent mom to 68.5) and Jakarta (-3.0 percent mom to 69.4). This is commensurate with the increase in Covid-19 cases in several regions, especially DKI Jakarta. By contrast, the CCI increased in Central Java (+5.6 percent mom to 84.7), North Sumatera (+0.9 percent mom to 69.8) and East Java (+0.1 percent mom to 65.4).

By income level, the CCI declined in all income groups. The CCI for low income consumers (with incomes below IDR 1.5 mn/month) declined to 64.1 (-11.1 percent mom), for mid-income consumers (with incomes between IDR 1.5 mn – 3.0 mn/month) the CCI dropped to 69.5 (-2.7 percent mom) and the CCI for highincome consumers (with incomes above IDR 3.0 mn/month) eased to 75.0 (-1.5 percent mom).

Consumers mentioned several factors that dampened local economic conditions. Some consumers are concerned with job scarcity (up to 40.08 percent from 37.30 percent in the previous month) especially in urban areas. At the same time, 42.75 percent of consumers were worried about the impact of the Covid19 outbreak in Indonesia especially in DKI Jakarta, West Java, South Sulawesi and East Java where Covid19 cases are continuing to increase. Consumer Confidence November 2020 Edition Consumer Confidence

Most consumers expect higher inflation over the next 6 months (the index measuring sentiment toward general prices rose by 3.1 percent to 164.0). In relation to the exchange rate, consumers in the main cities are more positive on the rupiah’s outlook (this index increased by 6.2 percent to 69.7). At the same time, more consumers think that interest rates will decrease over the near term (this index fell by 2.4 percent to 110.4).

On a monthly basis consumer buying plans were less solid (+0.5% mom, -22.6% yoy) in the October survey. Economic recovery will be slow as shown by the weak buying intentions index for all income groups. Of the ten categories of goods tracked by our survey, consumer purchasing plans increased in three of them (land, house renovation and livestock), while declines were seen in the other seven categories (automobiles, motorcycles, houses, home appliances, bicycles, gold jewelry and audio-visual equipment).

II. Consumer Confidence in the Government Index (CCGI) The Consumer Confidence in the Government Index (CCGI) fell by 2.8 percent mom to 112.6. Five of the CCGI components posted declines. Consumers expressed less confidence in the government’s ability to spur economic growth (-6.1% mom to 107.7), in line with the increase in the number of Covid-19 cases which is adversely affecting economic activities despite the further disbursement of government social assistance. In addition, consumers expressed less confidence in the government’s ability to stabilize general prices (-3.8% mom to 102.1), to enforce the rule of law (-4.5% mom to 121.3), and to ensure a safe and orderly environment (-1.4% mom to 160.0). By contrast, however, consumers expressed greater confidence in the government’s ability to provide and maintain public infrastructure (+1.5% mom to 164.2).