THE FNB/BER consumer confidence index dropped a very modest 1 point in 2Q2006 to +20, from an all-time high of +21 in 1Q2006. A first interpretation of this still very high confidence level (now sustained for six executive quarters, itself unprecedented historically) is one of no surprise, according to First National Bank chief economist Cees Bruggemans. The survey was undertaken during May, before the 0.5% interest rate hike announcement by the SARB. At the time consumers were being favoured by good employment gains (if we ignore the Quarterly Employment Statistics and use our own judgement in this important matter), good real purchasing power gains (6.5% wage gains relative to 4% CPIX inflation), double-digit wealth gains (housing, equities) over a year, low nominal interest rates and gearing, and high credit usage, he said. According to Bruggemans, SARB data shows consumer spending increasing by 7% annualised during 1Q2006, and that is unlikely to have slowed materially by May 2006 after a great Easter break.
