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FNB/BER CCI 2019Q3

After holding firm amid a year of very weak economic growth and rising unemployment rates,consumer sentiment finally slumped deep into negative territory during 2019Q3. The sharp drop in the CCI during t2019Q3 can mainly be ascribed to a completereversal in the economic outlook sub-index of the CCI and a further deterioration in the time-to-buy durable goods index.

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After improving in 2019Q3, construction activity gained further ground in 2019Q4. The higher activity lifted the FNB/BER Civil Confidence Index to 22, from 15 in 2019Q3. This marks the first time since 2017Q2 that confidence has been above 20.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) ticked down to 47.7 index points in November from 48.1 in October. The decline was broad-based as four of the five subcomponents of the headline PMI nudged down compared to the previous month. Despite the decline, the average level of the PMI in October and November is still slightly above that recorded in the third quarter.

After dropping from 28 in the second quarter to a 20-year low of 21 in the third quarter, the RMB/BER BCI rose to 26 in the fourth quarter. Confidence rebounded in three of the five sectors making up the BCI namely the building, manufacturing and retail trade. It declined in the new motor trade and remained essentially unchanged in the wholesale trade sector. Though the fourth quarter rebound in the RMB/BER BCI is encouraging, some realism is necessary: the improvement was a mere five index points and was not broadly-based across sectors. Moreover, at 26, the BCI remained deep in net negative terrain, with a strong majority of respondents still expressing a sense of pessimism.

After holding firm amid a year of very weak economic growth and rising unemployment rates, consumer sentiment finally slumped deep into negative territory during 2019Q3. The latest reading of -7 index points is the lowest since the fourth quarter of 2017. Household budgets are increasingly being strained by rising unemployment, slow wage growth, high tax rates, and soaring electricity prices. The decline in consumer confidence during 2019Q3 signals a further deterioration in consumers' willingness to spend.