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Malaysian Consumer Confidence Up 4 Points (2012)

Nielsen LogoKuala Lumpur – Consumer confidence in Malaysia rose four points to an index of 111 in the second quarter of 2012, a six-year high according to the latest global online consumer confidence findings from Nielsen, a leading global provider of information and insights into what consumers watch and buy. The index last hit its 111 level in the first quarter of 2006 (Chart 1).

 

Malaysia advanced to fifth place from seventh among the 56 countries surveyed in terms of confidence level, after Indonesia (120), India (119), The Philippines (116) and Saudi Arabia (115). The Nielsen Global Consumer Confidence Survey, established in 2005, tracks consumer confidence, major concerns and spending intentions among more than 28,000 Internet consumers in 256 countries.

Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

“Several developments have prompted an upbeat attitude among Malaysians,” said Richard Hall, Managing Director, Nielsen Malaysia. “Inflation grew at a slower pace since February, the ringgit outperformed Asian currencies in the first four months of the year, corporate earnings showed a favorable outlook for 2012, and manufacturing output picked up pace in February, March and April.”

Optimism towards local job prospects and personal finances continue to boost confidence

Although the overall confidence level towards job prospects was unchanged (remaining at 70 percent) from a quarter ago, the percentage of online respondents in Malaysia who rated their job prospects as excellent over the next 12 months went up by two percent to 15 percent quarter-onquarter (Chart 2).

Their confidence has helped position Malaysians as the third most optimistic job prospects online consumer group among the 56 countries surveyed. Three months ago, Malaysia ranked seventh. The perceptions on the state of personal finances improved by six percentage points (10% described as excellent) to 69 percent from last quarter, prompting Malaysia to clinch the seventh position (up from tenth in Q12012) in the top ten most optimistic personal finances list.

Almost two in five (38%) respondents stated that the coming 12 months will be a good time to purchase items they want and need, up by five percentage point compared to the first quarter of 2012. Malaysia ranked ninth globally on this sentiment.

Consumers are holding back spending and deferring purchasing plans

Despite the optimism shown in several indicators, the Fast Moving Consumer Goods (FMCG) movement tracked by Nielsen actually indicated a slowdown year-on-year in the last three months.

(Value growth year-on-year: 1.9% in April, 0% in May). Although May sales built up to reach a 2.8 percent growth month-on-month with 67 categories reporting growth, it is notable that sales were stagnant in May 2012 in comparison to May 2011.

“The trends actually indicate that optimism does not necessarily translate into spending, as Malaysians are among the highest savers in world. The survey shows that almost three out of five (59%) online respondents actually saved their spare cash. Consumers are holding back spending and deferring purchasing plans amid uncertainties with their “wait and see” attitude,” said Hall. “As Ramadan is approaching in less than a week, we shall see if the growth of stocking up on nonperishable items prior to the fasting month mirrors last year’s trend. The months of July and August will be crucial in gauging the real spending of a majority of the population in this country as well as examine if consumers have been reducing their disposable budget.”.

Evidence of consumers holding back their expenses is apparent via the strategies applied by respondents in controlling household budgets after paying off essential living expenses. There in ten online respondents actually claimed that they would still continue to cut down on out-of-home entertainment in order to manage their budget even in the event economic conditions improved, an increased of four percent (Chart 3).

Economy, job security and political stability are top concerns

Nielsen’s survey shows that the state of the economy remains the biggest concern for consumers surveyed, however, those worries eased slightly with a drop of six percentage points from a quarter ago. Consumers are still concerned about job security (15%) while political stability along with worries about debt have become the third biggest concerns for 12 percent of online respondents.

Interestingly, concern over work/life balance (9%) has surpassed the worries of increasing food prices for the first time since the second quarter of 2010 as inflation grew at a slower pace in the country (Chart 4).

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