India Slipped to Third Place Globally in Nielsen’s Consumer Confidence Index in Q2 2013; Measures at 118

India Slipped to Third Place Globally in Nielsen’s Consumer Confidence Index in Q2 2013; Measures at 118

Consumer confidence in India indexed at 118 in Q2 2013, a two-point decrease from Q1 2013, and a one-point decrease from Q2 2012. India slipped to the third most optimistic country, after Indonesia and the Philippines indexed at 124 and 121 respectively.

“The dip in confidence over the last six months reflects the concerns of the devaluation of the rupee and the continuing inflation for urban Indians” said Piyush Mathur, president, Nielsen India Region “Overall discretionary spending has taken a hit, with families cutting down on out of home entertainment and expenditure. Consumers are also being cautious and are controlling expenses for essentials. However, they are relatively optimistic about the job market which can be the function of some sectors with more opportunities.”

The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns, and spending intentions among more than 29,000 respondents with Internet access in 58 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 May 13 and May 31, 2013, consumer confidence rose in 45 percent of global markets measured by Nielsen, compared to 60 percent in the previous quarter.

 Discretionary Spending and Savings

Investing spare cash in savings, buying new clothes and technology products has seen a dip compared to last quarter. Slightly more than half (53%) of respondents in India indicated they would invest their extra cash in savings; the same quarter last year saw three in five (62% in Q2 2012) consumers using savings options.

Buying new clothes has dropped to 34 percent this quarter, from 41 percent in the Q1 2013, while 33 percent indicated they would invest in new technology. In the same quarter last year, 38 percent looked to procure new technology and 33 percent were keen on new clothes. The intent to invest in mutual funds has also seen a dip to 25 percent from 33 percent in Q2 2012.

Nearly two in five (77%) respondents have changed their spending habits to increase savings. The steps include saving on gas and electricity (50%), spending less on new clothes (50%) and cutting down on telephone expenses (36%).

When it comes to saving on dining out and entertainment, this quarter sees an eight percentage point increase from last quarter in consumers cutting down on out of home entertainment (38% in Q2 2013; 30% in Q1 2013). The shift is toward entertaining at home, with 18 percent consumers indicating they will entertain at home, versus 21 percent last quarter.

“The shifts in discretionary spending from last quarter indicate the guarded nature of consumers when it comes to spare cash. They are looking to stabilize their budgets in key categories, and entertaining out of home is not a priority anymore,” said Mathur. “The second quarter is also the post-incentives, post-bonuses period, so the euphoria has settled, and planning for financial stability has been set into place by families.”

Perceptions of Job Prospects, Personal Finances

Seven out of 10 Indians (72%) are optimistic about their job prospects in the next 12 months, one percentage point below last quarter. The same period last year indicated higher optimism in job prospects at 77 percent (Q2 2012).

Seventy-five percent of Indians feel that the state of their personal finances is good or excellent this quarter, a point percentage decline from last quarter.

Job Security, Economy Remain Key Concerns

The top concern for Indians continues to be job security (23%), while striking a work-life balance is a concern for one in 10 respondents (10%), same as last quarter. The state of economy is the biggest concern for nine percent of respondents, down three percentage points from last quarter (12% in Q1 2012).

Parents’ welfare and job security are the second biggest concerns for 12 percent respondents. For one in 10 respondents (10%), personal health and wellbeing is the second biggest concern.

Fifty-one percent of respondents said they believe India is going through an economic recession this quarter, reflecting a higher optimism this quarter versus last (60% in Q1 2012).

About the Nielsen Global Survey

The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted between May 13–31, 2013, and polled more than 29,000 online consumers in 58 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, 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 China Consumer Confidence Index is compiled from a separate mixed methodology survey among 3,500 respondents in China. The Nielsen Global Survey, which includes the Global Consumer Confidence Index, was established in 2005.