While the majority of the bigger markets posted signs of increasing consumer confidence, some countries are experiencing decline. Uncertainty shrouds the future trend in consumer confidence as the U.S, which is the biggest economy in the world, is poised to raise its interest rates. The mixed sentiments on consumer confidence around the globe throws confusion at the direction of global economic recovery.
In Russia, consumer confidence fell 14 points to -32.3 points in the 1st quarter 2015 where it had previously declined by 11 points to -18 in 4th quarter 2014. This decline came after a relatively stable 2nd and 3rd quarter 2014 according to Russia’s Federal State Statistics Service, which could have been the result of high inflation, economic sanctions, and a weaker ruble compared to the year before. Russia’s consumer confidence is expected to continue declining due to the low oil prices and the sanctions placed on its trades.
In Australia, the latest weekly ANZ-Roy Morgan consumer confidence level fell by 0.9% to 108.8%, the lowest level seen since 3rd quarter of 2014. According to ANZ Chief Economist, “consumers’ sensitivity to budget news is not surprising. Rather, it fits with the theme of the ‘fragile’ consumer we have seen over the last year or so, with confidence falling in response to any bad news around the economy or budget. This suggests that negative headlines around the worsening budget position could continue to have an impact on confidence, even if the government delivers a ‘dull’ budget as expected with few major policy measures.”
On the other hand, British consumer confidence continued an upward trend, reaching its peak in more than a decade this month, according to economic polling company GFK. Monthly consumer confidence index rose from +1 in February to +4 in March, its highest since June 2002. This exceeded all forecasts from 17 economists polled by Reuters last week, after households reported a more upbeat view of the economy and greater willingness to spend. Britain’s consumer confidence is expected to continue climbing due to the momentum built up on low oil prices.
In Germany, consumer confidence has also reached its highest since the euro was adopted in 2002, according to data released today by a German market research institute, GFK. The data showed that consumer confidence is set to rise to 10.0 points in April, the highest it has been since October 2001, attributing the increase in spending to falling oil prices, rising employment and low inflation. However, the rising consumer confidence could be reversed if Greek eventually exits the Eurozone, shaking the confidence of the world on the Euro.
Greater China’s consumer confidence showed positive signs. Taiwan's Consumer Confidence Index rose to 87.61 in Q1 from the previous quarter's 86.2 by 1.41 points. Despite being lower than the mainland's 104.3, it is higher than both Macau's 85.41 and Hong Kong's 83.8 points, according to the results of the quarterly study released Wednesday in Beijing. It is uncertain whether China’s consumer confidence will continue to increase due to crack down by the government on corruption, as well as the retarding economic growth.
In Japan, a Cabinet Office survey released on Friday, which includes views on incomes and jobs showed that consumer confidence in March improved for the fourth straight month. The survey's sentiment index for general households rose from a revised 40.9 in February to 41.7 in March. As the Japan economy has been taking a beating for more than 2 decades, it is uncertain whether Abenomics is sustainable; any sign of deflation will result in a dive in consumer spending.
Lastly in the U.S., a private research group, The Conference Board, said on Tuesday that its index of consumer confidence increased from a revised 98.8 (first reported as 96.4) in February to 101.3 in March. Economists surveyed by The Wall Street Journal had forecast the latest index to edge up to 96.8.
The rise in consumer confidence could be the momentum of the persistently low interest rate environment created by the U.S as well as the low oil prices. While oil prices may remain low in the short term, rising interest rates is expected to cut down consumer spending. Though a sudden reversal in consumer confidence is not likely to occur, it is only logical to assume that all party will eventually come to an end.
