Indonesia: Consumer Expectation Survey - November 2017

Transcription

1. CONSUMER SURVEY November 2017  The Bank Indonesia Consumer Survey confirmed that consumers were more upbeat on prevailing economic dynamics in November 2017, with the Consumer Confidence Index (CCI) increasing from 120.7 the month earlier to 122.1. Consumer optimism was driven by both components, namely the Current Economic Condition Index (CECI) and the Consumer Expectation Index (CEI), rising by 1.9 points and 1.0 points respectively. The higher CECI was attributed to the improving perception of respondents from all spending groups concerning current income, while the CEI was buoyed by growing expectations for future income and business activity by respondents of all spending groups.  The Survey also revealed that respondents predicted a build-up of inflationary pressures in February 2018, with the 3-month Price Expectation Index (PEI) rising slightly from 170.0 the month earlier to 170.9. Government policy to raise electricity rates and fuel prices expected at the beginning of 2018, along with limited supply of daily staples, particularly rice, and exacerbated by a seasonal spike in demand for goods and services during the approach to the Chinese New Year stoked household concerns of escalating inflationary pressures. A. Consumer Confidence Consumers were more optimistic in November 2017. A1. Consumer Confidence Index Consumers were more upbeat on prevailing economic dynamics in November 2017, with the CCI increasing from 120.7 the month earlier to 122.1 (Graph 1). Consumer optimism was driven by both components, namely the CECI and the CEI, rising by 1.9 points and 1.0 points respectively. The higher CECI was attributed to the indexes for buying durable goods and income, while the CEI was boosted by the Income Expectation Index and the Business Expectation Index. Graph 1. Consumer Confidence Index Methodology ________________________________________________________________________________________________________________ The Consumer Survey has been conducted monthly since October 1999. Moreover, since January 2007 the Survey has involved 4,600 households as respondents (stratified random sampling) in 18 cities, namely Jakarta, Bandung, Semarang, Surabaya, Medan, Makassar, Bandar Lampung, Palembang, Banjarmasin, Padang, Pontianak, Samarinda, Manado, Denpasar, Mataram, Pangkal Pinang, Ambon and Banten. The index of each city is calculated using the balanced score method (net balance + 100), which indicates that a score of 100 is considered optimistic and an index of below 100 is pessimistic. Real Sector Statistics Division 1
2. Consumer Survey Respondents of nearly all spending groups reported CCI gains in November 2017 , primarily those spending Rp2.1-3 million and Rp4.1-5 million per month. Based on age, however, respondents aged 41-50 and 20-30 confirmed CCI gains. Spatially, respondents from 13 of the 18 cities surveyed also reported a higher CCI, particularly in Ambon (20.6 points), Banjarmasin (9.3 points) and Semarang (9.2 points). Grafik 2. CCI by Spending Level Grafik 3. A2. Current Economic Condition Index Respondents perceived more favourable current economic conditions compared to the previous period. Respondents perceived more promising economic conditions in November 2017 compared to the previous period, reflected by a bump in the CECI from 107.6 in October 2017 to 109.5 in the reporting period. Gains of 5.8 points in the Income Index and 2.3 points in the Conditions for Buying Durable Goods Index edged up the CECI position (Graph 4). Respondents of all spending levels confirmed increases in the Consumer Income Index, most significantly those spending Rp3.1-4 million monthly (Graph 5). In terms of age, most age groups also reported gains in the Income Index, especially respondents in the 31-40 age bracket (Graph 6). Graph 4. Current Economic Condition Index by Components Real Sector Statistics Division 2
3. Consumer Survey Graph 5 . Income Index by Spending Level Graph 6. Income Index Ages The Conditions for Buying Durable Goods Index was observed to climb 2.3 points to a level of 112.4 in November 2017, with most gains reported by respondents with a monthly spend of Rp4.1-5 million and >Rp5 million, as well as those aged >60 years (Graph 7 and Graph 8). Most respondents were inclined to purchase electronic goods (cellular telephones, televisions, computers, etcetera), furniture and home furnishings. On the other hand, respondents of all educational backgrounds and ages reported declines in the Job Availability Index. R doctoral degrees (Graph 9) as well as those aged over 60 years old reported the deepest declines in the Job Availability Index. Graph 7. Buying durable goods Index by Graph 8. Buying durable goods Index by Spending Level Graph 9. Job Availability Index by Graph 10. Job Availability Index Respondents Educational Level Real Sector Statistics Division 3 by
4. Consumer Survey A3 . Consumer Expectation Index Consumer expectations were more upbeat compared to the previous period. Looking forward, consumer expectations for the next 6 months were more optimistic compared to the previous period. The optimism were demonstrated by a 1-point increase in the CEI to 134.8 in November 2017, driven by all component indexes, namely the Income Expectation Index (1.8 points) and the Business Expectation Index (1.1 points). Graph 11. Consumer Expectation Index by Components In November 2017, respondents spending Rp3.1-4 million per month and those aged over 60 reported the largest gains in the Income Expectation Index (Graph 12 and Graph 13). The upbeat optimism were driven by the perception of rising incomes and/or business turnover in the next 6 months in line with the expected business expansion . Consumers of all spending groups reported gains in the Business Expectation Index, especially those with a monthly spend of Rp2.1-3 million (Graph 14), as well as respondents aged over 60 (Graph 15). Consumers cited the rapid proliferation of infrastructure development, more promising economic dynamics and controlled inflation as the main catalysts of business expansion in the next 6 months. In terms of the Job Availability Expectation Index, respondents with a significant gains as well as those aged 41-50 (Graph 16 and Graph 17). Greater optimism concerning future job availability stemmed from the prevailing perception that the government and private sector would ramp up project activities, coupled with a more favourable economic outlook for the upcoming 6 months. Real Sector Statistics Division 4
5. Consumer Survey Graph 12 . Income Expectation Index by Spending Level Graph 13. Income Expectation Index by Graph 14. Business Condition Expectation Index by Spending Level Graph 15. Business Condition Index Graph 16. Job Availability Expectation Index by Respondents Educational Level Graph 17. Job Availability Expectation Index B. Consumer Financial Conditions B1. Consumer Income Respondents were more inclined to save. Greater consumer optimism concerning economic dynamics, supported by rising incomes, encouraged consumers to save rather than consume. In November 2017, the average propensity to consume ratio decreased 0.4% to 65.3%, while the debt service to income ratio fell 0.5% to 13.6%. In contrast, the savings to income ratio climbed 0.8% to 21% (Graph 18). Real Sector Statistics Division 5
6. Consumer Survey Graph 18 . Distribution of Household Income Allocation Respondents spending Rp3.1-5 million each month were least inclined to consume (Graph 19). On the other hand, respondents spending >Rp5 million and Rp4.1-5 million were more disposed to save (Graph 20). Graph 19. Graph 20. by Spending Level Spending Level B2. Consumption, Savings and Debt Households expected to spend more on consumption in the next 3 months. Households expected to spend slightly more on consumption in the next 3 months (February 2018). Household Consumption Expectation Index showed a moderate increase of 0.1 points, rising from 155.7 to 155.8 (Graph 21). Graph 21. Consumption Expectation Index for The Next 3 Months Real Sector Statistics Division 6
7. Consumer Survey In the next 6 months (May 2018), households expected to accumulate more debt, while saving less. Such developments were explained by a Debt Repayment Expectation Index of 157.2, rising 0.8 points, and a Debt Expectation Index of 117.0, falling 0.8 points (Graph 22). Graph 22. Saving and Debt Expectation Index for The Next 6 Months B3. Placements of Disposable Income and House Purchases Respondents predicted greater interest in equity instruments and property over the next 12 months. The latest survey confirmed that fewer respondents prefered to place their disposable income in savings deposits and term deposits in the next 12 months (as of November 2018), down to 48.9% from 49.3% in the previous survey. On the other hand, the percentage of respondents inclined to invest in stocks/mutual funds increased by 0.1% to 2.6%, while those favouring gold remained relatively stable at 15.5% and those keen to invest in property increased 0.2% to 22.7%. Graph 23. Placement of Disposable Income in The Next 12 Months Fewer respondents were inclined to buy or build a house in the next 12 months. During the upcoming 12 months (December 2017 to November 2018), only 6.4% of the survey respondents stated that buying or building a house (or extension) was very likely, down from 7.2% in the previous period. On the other hand, the percentage of respondents who thought buying or building a house was a possibility increased from 26.9% to 27.8% (Graph 24). Real Sector Statistics Division 7
8. Consumer Survey Graph 24 . Placement Plan on Property in The Next 12 Months C. Consumer Price Expectations C1. Price Expectations for the Upcoming 3 Months Respondents predicted inflationary pressures to build in February 2018. Respondents predicted a build-up of inflationary pressures in February 2018, with the 3-month PEI rising 0.9 points on the month earlier to 170.9 (Graph 25). Government policy to raise electricity rates and fuel prices expected at the beginning of 2018 along with limited supply of daily staples, particularly rice, and exacerbated by a seasonal spike in demand for goods and services during the approach to Ch concerns of escalating inflationary pressures. Regionally, the 3-month PEI was reported to rise in six of the cities surveyed, especially in Pontianak (12 points) and Padang (8.5 points). Graph 25. Price Expectation Index for the next 3 months C2. Price Expectations for the Upcoming 6 Months Respondents predicted milder inflationary pressures in May 2018. The 6-months PEI decreased 0.8 points to a level of 171.4 in the reporting period, indicating milder inflationary pressures expected by respondents in May 2018. Regionally, respondents in 10 cities predicted lower prices, most significantly in Palembang (8.6 points) and Padang (6 points). Real Sector Statistics Division 8
9. Consumer Survey Graph 26 . Price Expectation Index for the next 6 months C3. Price Expectations for the Upcoming 12 Months Respondents predicted inflationary pressures to accumulate again in the next 12 months. Respondents predicted inflationary pressures to accumulate again in the next 12 months (November 2018), reflected by a 12-month PEI of 176.0, up 0.5 points on the previous month. Regionally, respondents in five cities confirmed an increase in the 12-month PEI, particularly in Samarinda (14.5 points) and Makassar (7 points). Graph 27. Price Expectation Index for the next 12 months Real Sector Statistics Division 9
10. Box : Household Financial Performance per the Consumer Survey As one of the dominant economic players, households play a significant role in terms of economic activity, as evidenced by the portion of household consumption to GDP over the past three years that has averaged 56.0%. Furthermore, the shares of deposits as well as outstanding personal/individual loans (October 2017) in the financial system accounted for 52.7% and 44.7% respectively of the total. The significant role played by households in the economy and financial system demands the support of resilient financial conditions at the household level. The past year of 2017 has witnessed a slowdown in terms of household consumption, with the household consumption to GDP ratio decelerating from 5.02% (yoy) in the first three quarters of 2016 to 4.94% (yoy) in the same period this year. Congruent to the latest GDP data, the Bank Indonesia Consumer Survey of 18 cities revealed that households have been less inclined to consume in 2017, with the average propensity to consume ratio falling from 69.9% in 2016 (January-November) to 65.0% in 2017 (January-November). Survey respondents expected household consumption to rebound in the fourth quarter of 2017, however, reflecting an increase in the portion of consumption from 64.7% to 65.5%. In addition, households also expected to save more in the reporting period, with the corresponding savings ratio climbing from 20.3% to 20.6%. Graph 28. Household Income Allocation 12.3% of households were unable to save in the fourth quarter of 2017. Based on monthly spending, 17.1% of households with a monthly spend of Rp1-2 million rupiah were unable to save, the highest amongst all spending groups, indicating that low-income households were more exposed to financial distress, including changes in income, rising prices and unforeseen expenses. Table 1. Saving Allocation by Respondents Spending Level Real Sector Statistics Division 10
11. Consistent with households more inclined to consume and save , the debt to service ratio fell in the fourth quarter of 2017 to 13.9%. The ratio is still well below the threshold typically used by the banking industry to assess household credit risk, namely 30-40% (Source: Bank for International Settlements BIS). The latest Consumer Survey also showed that in the event of an economic shock, 55.2% of households would have rainyequivalent to 1Graph 29. Rainy-day Expenditure Level Savings by Respondents Graph 30. Source of Financing for Unable to Save Household Furthermore, the respondents who were unable to save stated that they would fulfil their unforeseen expenses through sources of funds outside of the formal financial system (banks, cooperatives, insurance and pension funds). Conversely, the lower-middle class was more inclined to ask for help from relatives, while the upper class tended to rely on insurance funds before asking for assistance from family members to meet their unforeseen expenses (Graph 30). Real Sector Statistics Division 11
12. Table 1 . Consumer Confidence Index and Prices Expectation Index Real Sector Statistics Division 12
13. Table 2 . Consumer Confidence Index by Respondent Expenditure Level Real Sector Statistics Division 13
14. Table 3 . Consumer Confidence Index by Respondent Age Real Sector Statistics Division 14
15. Table 4 . Consumer Confidence Index by Respondent Education Level Real Sector Statistics Division 15
16. Table 5 . Household Income Allocation by Respondents Expenditure Level Real Sector Statistics Division 16
17. Table 6 . Consumption, Saving and Debt Expectation Table 7. Placements of Disposable Income and House Purchases Real Sector Statistics Division 17
18. Table 8 . Consumer Confidence and Price Expectation Index by Region Real Sector Statistics Division 18
19. Real Sector Statistics Division 19
20. Table 9 . Respondent Figures Real Sector Statistics Division 20