Consumer sentiment in March climbed to its highest levels of the past 3½ years. Following a new marginal improvement, the relevant index appears to be stabilizing at nearly 65 points, for the first time since the signing of the Memorandum (5/2010). One development taking on particular importance is the continuous, over the past five months, rise in expectations regarding personal financial situation and the marked improvement in household assessments of current economic conditions. In contrast, expectations concerning the future of the economy have remained unchanged and optimism about a fall in unemployment in the near future has declined.
The Consumer Climate Index – CCI (65.5) reached its highest level of the past 3½ years (9/2010-3/2014), registering a marginal increase of 0.8 points relative to February. The two component indices showed slight changes. The Current Economic Conditions Index – CECI (45.6) fell by 1.3 points, while the Consumer Expectations Index – CEI (78.8) rose by 2.2 points in the same period.
Propensity to buy (64.8) plummeted (-7 points) relative to the previous month. Just 1 in 4 consumers (27%) consider the current period to be appropriate for major purchases of household equipment (furniture, electrical appliances, etc.). Assessments of personal financial situation (26.3) climbed to the highest levels since January 2011 (26.9), registering an increase (+4.5 points relative to February) for the second straight month. The proportion of citizens estimating that their personal financial situation has deteriorated over the past 12 months decreased to 76%, from 81% in the previous month.
Expectations of personal financial situation (61.5, +4.9 points compared to the previous month) reached a new historical high for the period since the signing of the Memorandum (5/2010-2/2014). The relevant index continued to rise for the fifth successive month (11/2013-3/2014).
Its gains over the past five months now total almost 16 points (15.6). The percentage of citizens who are optimistic that their personal financial situation will improve over the next 12 months has now reached double digits (11%), whilst the proportion of those anticipating a deterioration in their personal financial situation decreased to 50%, down from 53% in February. Optimism about the future of the economy remains at more or less the same levels as in the previous month. Expectations for the economy (70.8) rose (+4 points), whilst in contrast expectations for the economy over the next five years (104) declined (-2.2 points). Short-term expectations appear to be stabilizing at nearly 70 points during the past three months (1/2014-3/2014). At the same time, long-term expectations – despite the decline of the past two months – remain for the fourth consecutive month above the “psychological” 100-point barrier. Some 22% of citizens are optimistic that the economy will recover during the coming 12 months, and when the time scale is extended to five years the corresponding figure rises to 36%.
Expectations for unemployment declined, after the uptrend recorded in the previous three months (12/2013-2/2014). The percentage of citizens expecting unemployment to fall over the next 12 months dropped to 14%, from 17% in February. Expectations for saving and inflation showed only marginal changes. Just 12% (-1% relative to the previous month) anticipate a decrease in prices in the coming 12 months, while only 6% (+1% compared to February) consider it likely they will be able to save some amount of money in the year ahead.
