The Consumer Confidence Index, compiled by Globes Research and pwc Israel, fell by 2.1 points in May 2012 to 81.9 points (baseline 1996 = 100), after rising by 3.8 points in April and 2.4 points in March. The public's declining confidence pushed the index below the 82-84 point band where it has hovered since early 2011, with the exception of last year's summer of protest.
Consumer confidence in Israel may be facing a U-turn to pessimism, especially as all components of the Consumer Confidence Index fell in May. Normally, some components rise, while others fall.
The trend figure (the average of the indices for March, April and May), nonetheless rose by 1.1 points in May to 82.4 points, after rising by 0.8 points in April and 1.2 points in March. It is therefore premature to declare that the public is returning to the pessimism of the summer of 2011.
The Consumer Confidence Index is compiled from the responses to three questions: 1) What do you think of the current economic situation?; 2) What do you think the economic situation will be in six months?; and 3) What do you think your personal economic situation will be in six months?
The net balance of responses (the percentage of optimists less the percentage of pessimists) about the current economic situation fell by 2.1 points in May to minus 22.3 points. The net balance is calculated as follows: 18.7% of the public believes that the economic situation is good, and 41% think that it is bad. The net balance was minus 20.2 points in April and minus 25.5 points in March.
Consumers' confidence about their personal economic situation in six months also fell in May, wiping out the rise in April. The net balance on the question of the economic situation in six months fell by 2.7 points in May to 4.1 points, after rising 2.6 points in April and falling 0.1 points in March. Since December 2011, the trend figure for this component has moved within a narrow band of 5-6 points.
Last summer's social protest is believed to have turned the high cost of living into the main issue affecting consumer's expectations about their personal economic situation. It appears that the public's perception of the employment situation and the current and future general economic situation have had less influence on respondents' assessments than the cost of living. This interpretation is still valid so long as the net balance about the public's personal economic situation stays stable.
Published by Globes [online], Israel business news - www.globes-online.com - on June 7, 2012
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