Malaysian consumers third most confident globally
Focus Malaysia 06 Dec 2018 13:32
- At 127 points, consumer confidence is at its highest ever
- The economy, job security and work-life balance are top concerns
- Majority of Malaysians have a positive outlook on their personal finances
and job prospects
The Malaysia consumer confidence index continued its surge in the third quarter of 2018 to 127 percentage points (pp), up 10 points from the previous quarter and up 31 points versus Q3 2017, according to The Conference Board Global Consumer Confidence Survey, in collaboration with Nielsen.
This is the highest recorded confidence score in Malaysia, propelling Malaysia to become the third most confident country behind India and Vietnam (up four spots from the previous quarter).
The Consumer Confidence Index (CCI) is driven by three indicators, which are consumers’ perception on local job prospects, personal finances and intentions/readiness to spend. For Malaysia, there were improvements across all three indicators on both a quarterly and annual basis:
- 77% of Malaysians believe the state of their personal finances in the next 1
2 months will be excellent or good (versus 69% in Q2 2018, 56% in Q3 2017)
- 75% have a positive view on their job prospects in the next 12 months
(versus 73% in Q2 2018 and 45% in Q3 2017)
- 58% said that “now is the time to buy the things they want and need”
(versus 50% in Q2 2018 and 31% in Q3 2017)
“We attribute this unprecedented level of confidence to continued post-election optimism,” said Raphael Pereda, Managing Director of Nielsen Malaysia. “The announcement of the Sales and Services Tax (SST) during the quarter did little to dampen sentiment among consumers, who indicated an increased willingness to spend.”
Recessionary sentiment stable; economy and job prospects are top concerns
A majority of Malaysians still believe the country is in a recession (69% in Q3 2018, in-line with 65% in Q2 2018); of this, more than half (52%) are optimistic that the country’s economy will recover in the next 12 months.
Malaysians’ top five concerns in Q3 2018 were the economy (38% versus 40% in Q2 2018), job security (21% versus 26%), work-life balance (20% versus 18%), health (16% versus 13%) and political stability (16% versus 12%).
“Concerns about debt have reduced significantly from the previous quarter,” observed Pereda. “In the past, debt would typically rank among the top four concerns, but this time around it placed sixth. This is definitely a data point that we will continue to monitor.”
Malaysians still prudent spenders
While confidence levels are high, Malaysians are still cautious when it comes to spending their spare cash, as there were quarter-on-quarter decreases in intentions to spend on discretionary items such as new clothes (down 7%), holidays/vacations (down 5%), and new technology products (down 5%). More than half of Malaysians (55%) said they would save their spare cash, while one in three (30%) said they would use the extra money they had to pay off debt, credit cards or loans.
When asked if they have changed their spending habits in the last 12 months to save on household expenses, 82% of Malaysian consumers said yes (in line with 84% the previous quarter), with 39% of respondents spending less on new clothes (versus 54% in Q2 2018), 35% cutting down on out-of-home entertainment (versus 50% in the previous quarter) and 32% switching to cheaper grocery brands (versus 47% in Q2 2018).
“This should come as no surprise, as Malaysians have historically always been prudent spenders, and they will continue to be prudent particularly following the implementation of the SST,” said Pereda. “We will be keen to see the impact of the Budget 2019 on consumer sentiment in the coming months.”
The Conference Board Global Consumer Confidence Survey, in collaboration with Nielsen, measures perceptions of local job prospects, personal finances and immediate spending intentions among more than 32,000 respondents with Internet access in 64 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.