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Singapore's consumer confidence slips again in July

Thursday, July 23, 2015 - 05:50
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Shoppers at Ion Orchard shopping mall.

Singapore

SINGAPORE consumer confidence has dipped for a second month in July, squaring with the general slowdown in the broader economy.

The ANZ-Roy Morgan Singapore Consumer Confidence Index slid by three points month-on-month to 126.4 this month, figures released on Wednesday indicated.

The monthly figure is above the long-term average of 122.8, but 9.5 points shy of the one-off spike to 135.9 in July last year.

Chua Hak Bin, economist at Bank of America Merrill Lynch (BOAML) Singapore, citing pessimistic economic indicators such as a decline in gross domestic product growth, negative inflation and rising interest rates, said: "We've seen businesses worry about the economy . . . and as it trickles down, it is hurting the outlook for consumers as well."

Among consumers who were surveyed, the proportion who felt that their families are now better off financially than a year ago dipped from 29 per cent to 27 per cent; 8 per cent said they felt worse off financially, up from 7 per cent in June.

Looking ahead, one third (33 per cent) said they expected their family to be better off financially in a year, down three percentage points from June's figure. Conversely, 6 per cent of respondents - up from 4 per cent before - expect to be worse off financially in a year.

The survey began in January 2014; the results are based on 1,000 face-to-face surveys of people aged 14 years and above.

Singapore's manufacturing sector had contracted for the fourth straight month in May, with industrial output declining 2.3 per cent on a year-on-year basis.

And inflation had come in at below zero for the seventh consecutive month in May - the longest run of negative inflation in six years. This was largely the result of cheaper oil and the loan curbs that have dampened the car and property markets.

Mr Chua said: "Consumers whose wealth is parked in property might have seen a decline in household wealth. These factors could make them a lot more cautious, as costs continue to rise."

From the survey, the number of respondents who said that now was a bad time to buy major household items climbed seven percentage points to 19 per cent. Those who said that now was a good time to buy a big-ticket household items was steady at 20 per cent.

Just over half the respondents (51 per cent, up from 50 per cent) expected the country to have good times financially over the next 12 months. But 10 per cent, up from 7 per cent, expect "bad times" financially.

In the longer term, 51 per cent of respondents expected Singapore to have good times financially in the next five years; this was up three percentage points. However, 7 per cent (up one percentage point) said they expected bad times financially.

ANZ chief economist for South Asia, Asean and the Pacific Glenn Maguire attributed the lowered consumer confidence to the deep integration Singapore has with the region and the state of the global economy and financial markets, which have been weighed down by the flux in the European Union and China.

"In the near term, we expect to see sentiment improve as the achievements of Singapore over the past 50 years are celebrated. However, in the medium term, we are less certain on the direction confidence is likely to evolve.

"The general elections will be called in the next few months, property prices are continuing to decline and wage pressures are unevenly distributed."

BOAML Singapore's Dr Chua, pointing to the shedding of workers in manufacturing and the manpower struggles in the food-and-beverage industry, warned: "If the slowdown persists, there is a risk of the economy just stagnating."

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