Consumer Confidence Survey Q2/2011: Asia Pacific And Middle Eeast/Africa Regions Suffer Declines, But Remain Most Optimistic

Key Findings:

• Usa consumer confidence drops in Q2
  
• Cash-strapped consumers plan further cuts in all discretionary spending

Ho Chi Minh – July 19, 2011 – Consumer confidence in Vietnam slumped to 97 points, dropping 1 point versus the previous quarter.  Globally, the story continues to worsen as global online consumer confidence declined to its lowest level in six quarters and economic recovery hit a stumbling block and recessionary jitters again reverberated around the world, according to second quarter findings of Nielsen Global Online Consumer Confidence Survey.  

  “There wasn’t enough positive news to inspire confidence among global online consumers in the second quarter,” said Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, a part of Nielsen. “Weak economic figures, slowing manufacturing performance in Asia, intensifying debt crisis in Europe and political instability in the Middle East combined with rising household expenses and food inflation all took its toll on consumers’ fragile confidence. Hopes for full global recovery in the next twelve months petered out in Q2 as the majority of consumers around the world remained in a recessionary mindset.”

 The Nielsen Global Online Consumer Confidence Survey, established in 2005, tracks consumer confidence, major concerns and spending intentions among more than 31,000 Internet consumers in 56 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

 Online Vietnamese show more signs of caution

Echoing global concerns, Vietnamese show more pessimism as only 52 percent think their job prospects will be “good” in the next 12 months, a decrease of 8 points, compared to the previous quarter.  Nearly two-thirds (63%) of consumers believe the economy is in a recession and only a third think Vietnam can be out of the situation in the next 12 months.

 Inflation is still a challenge as more than half (64%) of online Vietnamese consumers indicate now is not the time to buy the things they want and need given the cost of things today and their own personal finances. 88 percent of consumers claim they have changed their spending to save on household expenses versus one year ago.  Online Vietnamese have taken the following top 5 measures to save on household expenses: save on gas and electricity (73%), spend on new clothes (70%), cut down on out-of-home-expenses (61%), delay replacement of major household items (52%), and cut down on telephone expenses (51%).

 More consumers globally are feeling cash strapped as cost of living expenses and rising food and energy inflation continue to squeeze household budgets. Rising food prices was again consumers’ top global concern, surpassing the economy as the top concern for the second quarter in a row

 Top Concerns over the next 6 months

 Recessionary Mindset

Regions of the Middle East/Africa and Asia Pacific posted the steepest declines of 12 and nine points respectively compared to last quarter, but current figures are aligned with year-ago trends. And confidence levels in Europe (74) and Latin America (91) remained largely unchanged edging up one index point each. Despite its nine point dip, Asia Pacific remained the most optimistic region at 98 points, followed by Middle East/Africa at 94 points.

 “Second quarter data revealed that consumers have retreated back into a recessionary mindset and they are tightening their belts again after the last 12 months of slowly improving, but cautious spending,” said Dr. Bala. “According to the latest survey, consumer allocation intentions declined globally in all discretionary areas from investing in stocks and buying clothes to taking holidays and upgrading technology compared to three months ago. For the outlook to improve for the rest of the year, consumers globally will look to greater stability in food and energy prices, as has begun to occur recently, along with abatement of region-specific concerns.”

 Slowdown Impacts Outlook, But Asians Remain Optimistic

Asia Pacific remained the most optimistic region at 98 points, followed by Middle East/Africa at 94 points. Regions of the Middle East/Africa and Asia Pacific posted the steepest declines of 12 and nine points respectively compared to last quarter, but current figures are aligned with year-ago trends.

 Eight out of 14 Asia Pacific markets posted quarterly declines in Q2 with steepest declines from Australia (-8 points) and Singapore (-6 points). Australia’s index has been on the decline since Q3 2010. “Australian households are being hit hard with unrelenting price increases across the board. From July 1, households have been hit by one of the biggest rises in the cost of living in decades – utility bills. These are set to soar with electricity, water and gas prices all increasing,” said Chris Percy, Managing Director, Nielsen Pacific. “And the January floods, which restricted supplies of fruit and vegetables, had lingering effects on produce costs, causing food prices to rise. Belt-tightening is the norm for many households as price increases erode family budgets.”

 Malaysia, New Zealand, Philippines and South Korea posted quarterly confidence increases and Hong Kong remained flat. China’s consumers’ confidence declined three points quarterly to 105 and is four points off its year ago index of 109.

 India remained the most optimistic country in first quarter (131 index points) followed by Saudi Arabia (118) and Indonesia (116). Despite a five point quarterly decline, remained the most positive about job prospects and personal finances and have consistently reported the highest consumer confidence scores since the Nielsen survey inception in 2005. “A host of factors are weighing heavily on the Indian consumer’s mind. While still clearly the most optimistic across the globe, heated price inflation, fuel prices hikes and an uncertain global economy are acting as constraints to a buoyant outlook,” said Justin Sargent, Managing Director, Nielsen India. “We are likely to see adjustments to the purchase basket in terms of greater ‘value-consciousness’ guided by robust demand, but a large pull back in terms of overall spending is unlikely unless inflation continues unabated.”

 About the Nielsen Global Online Survey

The Nielsen Global Online Survey was conducted between May 20 and June 7, 2011 and polled more than 31,000 consumers in 56 countries throughout Asia Pacific, Europe, Latin America, the Middle East, Africa and North America. The sample has quotas based on age and sex for each country based on their Internet users, and is weighted to be representative of Internet consumers and has a maximum margin of error of ±0.6%. This Nielsen survey is based on the behavior of respondents with online access only. Internet penetration rates vary by country. Nielsen uses a minimum reporting standard of 60 percent Internet penetration or 10M online population for survey inclusion.  

 About Nielsen

Nielsen Holdings N.V. (NYSE: NLSN) is a global information and measurement company with leading market positions in marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and related properties. Nielsen has a presence in approximately 100 countries, with headquarters in New York, USA and Diemen, the Netherlands. For more information, please visit www.nielsen.com.