JakartaPost-Sept 10
Indonesian consumer confidence strengthened in August, buoyed by a more positive public assessment of the job market and household spending plans, though retail spending is recovering only slowly. Bank Indonesia’s (BI) Consumer Confidence Index (CCI) climbed to 118.5 points in August from a reading of 116.8 in July, according to survey data released by the central bank on Tuesday. BI reported that the Current Economic Condition Index (CECI) increased to 109.4 from 107.9 in the previous month, while the Consumer Expectations Index (CEI) rose to 127.6 from 125.7. The central bank attributed the more improvement largely to consumers’ more upbeat perceptions of employment opportunities and their plans for purchasing durable goods, which describes long-lasting products like cars or washing machines. The Job Availability Index climbed to 104.1 from 101.1, while the Durable Goods Purchasing Index rose to 106.1 from 104.1. The Current Income Index remained in optimistic territory at 118.0. The CCI is used to gauge how optimistic consumers feel about economic conditions and their own financial situation based on monthly nationwide surveys. It also includes public views on inflation and job prospects. The higher the index values, the more positive respondents assess circumstances. Readings above 100 reflect optimism, while values below 100 point to pessimism. The survey found that confidence was highest among respondents with monthly spending above Rp 5 million, who recorded a CCI of 123.9. By age group, consumers aged 20 to 30 years were the most optimistic, with an index value of 123.3. The Macro Strategy Team at securities brokerage Samuel Sekuritas Indonesia expects limited further upside in consumer confidence from the current level. Further improvement would hinge on stronger employment growth and real income improvement as well as manageable inflation, which is hard to achieve given high current commodity prices. The central bank is likely to remain focused on rupiah stability and inflation management, the analysts wrote in a report issued on Wednesday, adding: “Overall, the August CCI improvement is slightly positive, but still signaling weak recovery in household consumption.” From a macro perspective, the improvement in confidence provided some support for household spending in the third quarter of this year, although the impact was likely to be gradual, according to the team. Samuel Sekuritas went on to say that, following private consumption growth of 5.06 percent yoy in the second quarter, the latest CCI data suggested that the near-term consumption momentum was unlikely to accelerate significantly. “Risks remain from weak labor market conditions, limited purchasing power recovery and cautious household spending.” Read more at:
