Consumer Confidence Survey Q3/2011: Economy Re-emerges as The Top Global Concern

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Ho Chi Minh City, 1 November 2011 – Global online consumer confidence fell for the seventh consecutive quarter as confidence in 31 of 56 global markets measured declined, according to third quarter global online consumer confidence findings from Nielsen, a leading global provider of insights and analytics into what consumers watch and buy. 

 “Third quarter was volatile and challenging for global economies and financial markets amid stagnant U.S. unemployment figures and a worsening euro zone debt crisis,” said Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, a part of Nielsen. “A recessionary mindset is growing among consumers as more than half say they are currently in a recession—up four percentage points from last quarter and seven points from the start of the year. The result is continued spending restraint for discretionary expenses, which is expected to continue into the next year.”

 The Nielsen Global Online Consumer Confidence Survey, established in 2005, tracks consumer confidence, major concerns and spending intentions among more than 28,000 Internet consumers in 56 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

 In the latest round of the survey, conducted between August 30 and September 16, 2011, the majority of respondents (64%) agree that now is not a good time to buy the things they want and need, with one-in-five Europeans and one-in-three North Americans reporting they have no spare cash. The outlook for consumers in these regions is more pessimistic now than it was at the height of the 2009 recession. Among North American and European respondents who believe they are in a recession, roughly 60 percent believe it will continue into the next year—up from 54 percent in Q1 2009.

 Economy Concerns Mount

The economy re-emerged as the top concern among 18 percent of online consumers across the globe. The economy last topped concerns in Q4 2010, before it was replaced by worries over increasing food prices in the first half of this year. Job security follows close behind for 14 percent of consumers, rising five percentage points from three months ago. Managing a work/life balance, increasing food prices and concerns about health round out the top five most stressful issues for respondents.

 “Driven by a stalled job market and uncertainty about the future course of the global economy, concerns over job security and other economic risks rise to new heights in the third quarter in many parts of the world,” said Dr. Bala. In North America, one-in-three are concerned about the economy—up seven points from second quarter and more than one-in-10 (12%) are worried about job security—an increase of five points from three months ago.

 In Asia Pacific, the economy (18%) and job security (15%) rose eight and seven points, respectively and the economy is also a top concern for Vietnam (19%), Thailand (29%) and Singapore (27%).

  Top 5 Concerns in Q3/2011

 Future Spending Intentions

For the first time, Nielsen asked global respondents how they allocate their monthly budget and where they would increase or decrease spending if their budget expanded or contracted by 10 percent. “The results are very revealing,” said Dr. Bala. “Overwhelmingly, there is a sense of weariness and pent-up desire for a respite; when households contemplate a 10 percent increase in budget, we see a desire to expand allocation to indulgent categories like ‘pleasure travel/vacations’ (+29%) and ‘recreation and entertainment’ (+20%). There is also a sense of economic uncertainty and a need for a safety net, so consumers also add to their ‘savings/investments’ (+25%).”

 On the flip side, when budgets are reduced by 10 percent, discretionary spend—especially in the areas of ‘apparel’ (-21%) and dining out’ (-18%)—are reduced. Consumers also indicated a spending cut back on ‘electronics and appliances’ (-14%). “If the global economic climate worsens, these three sectors appear to be particularly vulnerable,” continued Dr. Bala.

 In the event of having to make do with a smaller budget, respondents also indicated a reduction in savings/investment by 10 percent. “The asymmetry with expansion suggests that while respondents would like to preserve or add to their savings and investments, they also recognize that they may be bumping up against harder economic realities," said Dr. Bala.

 Vietnam – Uncertainty remains

Vietnam consumer confidence stands at 96 points for Q3/2011; dipping 7 points since the start of this year.  Echoing global concerns, over two–thirds (69%) of Vietnamese consumers believe they are currently in an economic recession, a 6 percent increase versus the previous quarter.  And 37 percent believe Vietnam will be out of a recession in the next 12 months.

Despite concerns about the economic recession, Vietnamese consumers are still optimistic as more than half (57%) believe job prospects will be good-to-excellent in the next 12 months..  When asked about their state of personal finances in the next 12 months, 53 percent stated it would be good-to-excellent; a 3 percent dip versus the previous quarter.  Despite a fairly positive outlook on the job market and personal finances, 61 percent of Vietnamese stated ‘now is not the good time to buy the things they need’ making them the most pessimistic response in the region.

Similar to previous quarters, Vietnamese consumers continue to put spare cash into savings (64%) most, holiday/vacation (31%), new technology products (27%) and new clothes (26%).

Compared to this time last year, which of the following actions have consumers taken in order to save on household expenses:

Region Review

Asia Pacific continues to dominate the list of most optimistic countries with seven of the top 10 highest consumer confidence scores hailing from this region. India, despite a decline of five points, retains the top spot with an index of 121, followed by Saudi Arabia (120), Indonesia (114), Brazil (112), Philippines (112), Thailand (109), United Arab Emirates (105), China (104), Hong Kong (104) and Malaysia (101). Hungary (37) was the most pessimistic country in third quarter, together with Portugal (40), South Korea, Romania and Croatia (49).

Asia Pacific and Latin America were the most optimistic regions last quarter at 97 points, while Asia Pacific posted a one point regional decline from 98 points in Q2. Middle East/Africa followed closely at 96 index points with a two point quarterly gain. North America declined two points to 79 and Europe remained the most pessimistic region, remaining flat at 74 points.

 Asia Pacific Savers and Investors

Asia Pacific continues to deliver solid consumer confidence results despite a one point index decline regionally in third quarter to a score of 97. The region boasts the largest percentage of savers, with 61 percent indicating that they plan to put spare cash into savings compared to the global average of 46 percent. One-in-three Asia Pacific online consumers also plan to invest in stocks/mutual funds, which is considerably higher than anywhere else in the world—almost double the global average of 18 percent.

 India has reported the highest consumer confidence index score for seven straight quarters. Prior to that, only Indonesia or Norway had occasionally taken the number one spot from India. Following close behind, confidence in Saudi Arabia rose 13 points in third quarter to an index of 120. “In Saudi Arabia, state spending, bolstered by high oil prices and a boost in crude oil output remains a central driver of economic activity,” said Arslan Ashraf, Managing Director, Nielsen Saudi Arabia. “The surge in Saudi consumer optimism comes as the impacts of the massive budget allocations and increases in public spending announced earlier this year by the government begin to trickle down, reaching the average citizen. The aggressive job nationalization program announced at the end of the second quarter combined with generous handouts, salary increases, housing loans, and welfare programs has translated to improved personal finances and promising job prospects for Saudi consumers.”

 Despite the overall positive economic conditions in Asia Pacific, 10 of the 14 countries measured reported declines from three months ago. Singapore and Malaysia saw the biggest confidence declines of nine points each. “Singaporean consumers turned into a more pessimistic group over the third quarter due to a confluence of factors,” said Joan Koh, Managing Director, Nielsen Singapore. “These include the prospect of a more pronounced global macroeconomic malaise, continuing inflationary pressures and the subtle shift in local politics. Consumers have also witnessed the higher volatility in asset prices, which contributed to a higher level of uncertainty about how to protect their wealth.”  

 About the Nielsen Global Online Survey

The Nielsen Global Online Survey was conducted between August 30 and September 16, 2011 and polled more than 28,000 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. The Nielsen Global Online Survey, which includes the Global Online Consumer Confidence Survey, was established in 2005.

 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, visit www.nielsen.com.