Israeli consumer confidence rises after months of pessimism

The Consumer Confidence Index rose 5.3 points to 82.4 points in January.

The Consumer Confidence Index, compiled by Globes Research and pwc Israel, rose by 5.3 points in January 2012 to 82.4 points (1996 baseline = 100 points). After months of pessimism, the calm in the Israeli and global capital markets and reduced fears of a pending sharp global recession boosted the index.

The Consumer Confidence Index is compiled from the responses to three questions: What is your opinion about the economy?; What do you think the economic situation will be in six months?; and, What do you think your personal economic circumstances will be in six months?

Analysis of the responses provides the net balance of positive assessments; i.e. the number of respondents who say that the economic situation is good and will improve in six months, less the number of respondents who say that the economic is bad and will worsen in six months.

The net positive balance about current economic conditions rose by 1.4 points to minus 26 points: 18.4% of respondents are optimistic and 44.4% are pessimistic. The net positive balance fell by 4.4 points in December and by 3.9 points in January.

The most important response in January was for the third question - the slide in consumer confidence about the future was halted. The net positive balance about respondents' assessment of their economic conditions in six months rose to 8.4 points in January from 2.4 points in December and 6.8 points in November. The calmer capital markets may be the cause for the rebound, as well as the interest rate cuts and fall in the inflation rate.

This component of the index had been affected in recent months by last summer's social protest and the subsequent hopes from the Trajtenberg Committee. In January, respondents were again mainly influenced by the economic factors that shaped their expectations before the protest.

The public's financial planning

In January, "Globes" began to examine the public's position about their financial investment. Respondents were asked whether they planned to increase, reduce, or keep unchanged their securities portfolio, specifically investments in stocks and bonds (including short-term Treasury notes).

16% of respondents said that they have a securities portfolio. Of these, 16% plan to increase their exposure to the capital market, 12% said that they will reduce it, and 45% said that they will keep the exposure unchanged. 26% said that they did not know or declined to respond.

Published by Globes [online], Israel business news - www.globes-online.com - on February 2, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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