Concern as SA consumer confidence index declines further

Presenting the results, independent economist advisor Roelof Botha said despite staying above the neutral 50%, this decline tells two stories: "First of all, it shows that consumers are still nervous, and second consumers are still optimistic but not as optimistic as we would like them to be."

Botha blamed the grossly overvalued rand, which he said was stifling the creation of jobs and putting manufacturing under pressure.

The manufacturing sector is the country's biggest jobs provider.

Unemployment pressures

"Despite unemployment being under pressure, we should take some relief because regular income remains resilient," he pointed out.

Regular income, which is the most optimistic of the index's five metrics, increased slightly from 68.3 to 69.2, while the stock market (49.4) and employment (48.6) have wandered into negative territory, according to the survey, which involves 24 markets worldwide.

Close to one million people lost their jobs in SA since the 2008 recession, and despite the positive economic growth registered by SA in the past year or so, experts said the economy has been growing at a very slow pace to be able to create more jobs.

The survey said despite a welcome return to positive real Gross Domestic Product (GDP) growth in the third quarter of 2009 (4.6% during the first quarter of 2010), the GDP growth has since become somewhat subdued, declining to 2.8% in the second quarter and 2.6% in the third quarter of 2010.

Electricity is key

"The minute we start getting more electricity, we will begin to see the economy growing at a rate of 7%, therefore creating many jobs, I have no doubt about that," Botha said.

Besides the decreasing employment indicator, the survey also shows a significant drop in the quality of life in SA (55.8% six months ago to 54.7% currently).

Botha attributed the drop in quality of life to factors such as precarious electricity supply, lack of road maintenance causing higher fatalities every year, high cost of rehabilitating the public health sector (R57bn), 2000 public servants guilty of corruption of R600 million, countrywide escalation of strike and social unrest in 2010, 65% of the country's 256 state entities failing audit procedure, and several local authorities and public sector agencies becoming semi-dysfunctional.

All time low

Furthermore, he said the latest decline in consumer confidence is the lowest level since the inception of the MasterCard index in 2004, adding that the country should be concerned.

One of the striking features of the latest index is that Johannesburg and Cape Town's confidence levels have slightly improved, in contrast to Durban which experienced a sharp decline (down from 51.3 to 34.3).

Botha attributed the 'downfall' of Durban to, among others, the harbour strike that crippled the province and hurt exports. "You can't sell overseas if you cannot take out the products out of the country," he said.