Consumer confidence up, despite labor market pessimism

The Consumer Confidence Index by 5.3 points in October 2013 to 80.7 points.

The Consumer Confidence Index, compiled by Globes Research and pwc Israel, rose by 5.3 points in October 2013 to 80.7 points (baseline 100 = 1996), after rising 2.3 points in September and 2.8 points in August. The cumulative 10.4 gain in the index over the past three months strengthens the possibility of an optimistic turnaround, after dismal months and doubts about the functioning of the economy.

In three-month moving trend figures, the Consumer Confidence Index rose by 3.4 points in October to 76.4 points, after rising by 1.4 points in September and 3.4 points in August. This finding also reinforces the impression that the public is more optimistic, which is reflected in a corresponding improvement in consumer sentiment.

The Consumer Confidence Index survey, conducted by the Smith Institute, comprises three questions: "What in your opinion is the current state of the economy?"; "What will be the state of the economy in six months' time?"; and "What will be your personal economic situation in six months' time?" For each question, "Globes" takes the proportion of optimists, deducts the proportion of pessimists, to obtain what is called "the net balance of optimism." If, for example, 40% of the respondents in the survey estimate that their situation will be better in six months' time, and 50% estimate that it will be worse, the net balance is minus ten percentage points.

The net balance of optimism to the first question (the current state of the economy) rose by 2.3 points in October to minus 31.6 points, after rising by 0.8 points in September and 3.7 points in August. The upward crawl in this figure has resulted in a 9.2-point improvement over four months.

The net balance of optimism for the question about respondents' personal economic situation in six months rose strongly in October for the second consecutive month. It rose 6.8 points in October, after rising 5 points in September and falling 0.4 points in August. The net balance of optimism rose to a positive 9.5 points - its highest level since April 2013.

The expanded Consumer Confidence Index, which includes a question about expectations for the labor market, rose to 72.9 points in October from 70.2 points in September and 67.8 points in August. In view of reports about layoffs, and despite higher expectations about the functioning of the economy, the net balance of optimism for the labor market in six months fell by 4.8 points in October to minus 20.3 points, after rising by 2.6 points in September and one point in August.

Published by Globes [online], Israel business news - www.globes-online.com - on November 11, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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