The Malaysian consumer confidence showed signs of resilience in the second quarter of 2017 with an index score of 94 percentage points (pp) - up 7 points compared to Q2 2016, securing its spot as the 28th most confident country globally, but second lowest in Southeast Asia.
In the latest online survey, cconfidence levels in Southeast Asia continues to dominate the top 10 spot globally with four out of six countries in the region scoring above the 100 pp mark. Consumers in the Philippines are the most confident globally (130 pp, -2 from Q4 2016) followed by Indonesians in third place (121 pp, +1), Vietnamese in fifth (117 pp, +5) and Thais in the 10th spot (107 pp, -3). Singapore is ranked 31st globally with a score of 89 pp (+3 compared to Q4 2016). The average global consumer confidence is 104 pp (+3 versus Q4 2016).
“The consumer confidence level for Malaysia this second quarter has shown a positive improvement, the highest increase across all Southeast Asian countries, and is now at its highest level since the first quarter of 2015,” said Richard Hall, Managing Director of Nielsen Malaysia. “This upward shift in sentiment is likely a result of the improvement in the key economic indicators, a stabilising currency and no major shocks in the system. However, while the index remains marginally below the neutral level, we see that any increase in consumer spending towards the second half of the year will be driven by continued positive economic news and price stability.”
The economy (47%), job security (22%) and increasing food prices (18%) has been listed as Malaysian consumers’ top key concerns in Q2 2017. Regardless of the positive economic indicators, 83% of the surveyed respondents believed that the nation is still in a recessionary state (-2% compared to Q4 2016).
On the positive side, one in two Malaysian consumers perceived that their state of personal finances to be either good or excellent in the next 12 months (52%, +7% compared to Q4 2016) and that the perception of local job prospects among Malaysians has also registered a positive improvement with 44% respondents feeling that employment outlook over the next of 12 months to be either good or excellent (compared to 35% in Q4 2016).
Other key areas of concern that recorded a slight increase compared to two prior quarters include work/life balance (15%, up 4%), debt (15%, up 2%) and crime (8%, up 1%).
“There still remains a question of the disconnect between the economic indicators and consumer sentiment which, although moving the same direction now, still indicate that the average Malaysian consumer is not feeling the impact of the positive economic growth at a grassroots level. Whilst the economy remains the number one concern for half of the nation’s consumers, uncertainty will most likely intensify as the election period approaches, which is on the horizon,” notes Hall.
Consumers in five Southeast Asia countries continue to lead globally when it comes to saving intentions. Consumers in Thailand are ranked 2nd globally (69%) followed by Indonesia and Singapore (66%, 5th, respectively) as well as Malaysia and Vietnam (63%, 7th, respectively). The Philippines is one spot shy from the top 10 list at 11th place with 58% and the global average of consumers depositing spare cash into savings is 52% (up 2% versus Q4 2016).
Whilst focusing on savings, Malaysian consumers are also seen to be planning for their golden age by stretching any extra cash into investing shares of stock/mutual funds (32%), paying medical insurance premiums (25%) and towards their retirement fund (22%).
And when it comes to big-ticket items, at least one-third of Malaysians would spend on holidays/vacations (40%, +10% compared to Q4 2016) and new clothes (32%, +11% from Q4 2016). The survey also revealed an increase in other self-indulgence expenses as compared to Q4 2016 with at least one in five respondents spending on out-of-home entertainment (21%, +5%) and new technology products (19%, +6%).
“Malaysian consumer’s intention on spending more is clear. However, this seems to be focused on more indulgent items – which may be due to a relief from the pressure they’ve felt at the start of this year. The spend, coupled with an increase in efforts to save and clearing of debts, may mean that we don’t see this impact at an everyday spending level.” explains Hall.
While the survey reveals an overall more positive sentiment, Malaysian consumers remain prudent about their spending habits. About eight in 10 respondents have said that they have changed their spending habits to improve household savings in the past 12 months (84%, -2% from Q4 2016) and about half of the respondents also said they have spent less on new clothes (57%, -1%), out-of-home entertainment (56%, +1%) and switched to cheaper grocery brands (47%, -4%) in the past year in an effort to cut back on household expenses.
However, should economic conditions improve, at least one-third of Malaysian consumers are expected to continue to save on gas and electricity (33%) and reduce on out-of-home entertainment (33%) while about one-quarter of the respondents said that they will spend less on new clothes (28%) and switch to cheaper grocery brands (28%).
The Fast Moving Consumer Goods (FMCG) sector registered a drop of 2.2% for year-to-date (YTD) June 2017 but we saw a recovery in Q2 2017 where the market was flat at just a 0.2% decline as compared to the same quarter in the prior year.
Four in six of the FMCG super categories recorded a positive growth in Q2 2017 with Health & Wellness (10.4%) registering double-digit growth followed by Snack & Confectionery (5.5%), Personal Care (3.9%) and Household (0.9%). On the contrary, both the Beverage (-5.3%) and Grocery (-1.2%) super categories slipped slightly as compared to the same period prior year.
“The improvement in sentiment has yet to filter through to the FMCG sector sales. The year to date indicates a sharp downturn – although the decline has slowed somewhat during the second quarter. Nevertheless, there’s hope the current positive economic environment will encourage increased consumer spending in the second half of the year,” observes Hall.
For more detail and insight, download Nielsen’s Q2 2017 Global Consumer Confidence Report.
For a historical look at global consumer confidence by region, country and time period, explore the Nielsen Global Consumer Confidence Trend Tracker.
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted 9 – 27 May 2017. The findings in this survey are based on an online methodology in 63 countries. In Malaysia, the sample size is 515. While an online survey methodology allows for tremendous scale and global reach, it provides a perspective only on the habits of existing internet users, not total populations. In developing markets where online penetration is still growing, audiences may be younger and more affluent than the general population of that country. Three sub-Saharan African countries (Ghana, Kenya and Nigeria) utilize a mobile survey methodology and are not included in the global or Middle East/Africa averages discussed throughout this report. In addition, survey responses are based on claimed behavior, rather than actual metered data. Cultural differences in reporting sentiment are likely factors in the measurement of economic outlook across countries. The reported results do not attempt to control or correct for these differences; therefore, caution should be exercised when comparing across countries and regions, particularly across regional boundaries.