Global discretionary spending intentions declined or remained steady in the first quarter across all lifestyle categories. While confidence across global regions remained relatively stable in the first quarter, there is considerable variation across different markets.
Global consumer confidence started 2015 with an index score of 97″an increase of one point from fourth-quarter 2014 and from a year-ago, according to the Nielsen Global Survey of Consumer Confidence and Spending Intentions. The Nielsen consumer confidence index measures perceptions of local job prospects, personal finances and immediate spending intentions, among more than 30,000 respondents with Internet access in 60 countries.
In the first quarter of this year, the key emerging markets of Brazil and Russia saw large declines in confidence for the second consecutive quarter, with the drop in oil prices and the political instability in Brazil. China dropped another index point at the start of this year, which comes after a four-point decline in the previous quarter, reflecting the recent slowdown in GDP there.
In Europe, there are signs of improved consumer confidence in many countries, which reflects signs of growth in these markets. Lower oil prices have helped European consumers who are not in oil-producing countries, and labor markets are improving. On the other hand, the falling Euro against the dollar is good for export industries but not for consumers, who will pay more for imports.
The good news is that, compared to the end of last year when all regional confidence scores declined, it was a more upbeat start to the year; as confidence increased slightly or remained stable in every region except Latin America. Consumer confidence remained steady in North America (106) and increased one point in Asia-Pacific, posting the highest quarterly regional index score of 107.
Confidence in the Middle East/Africa (96) and Europe (77) edged up one point in the first quarter, but decreased two points in Latin America (86)”the region’s lowest score since 2011.
Among the world’s largest economies, consumer confidence increased most in Japan, rising nine points to 82 in the first quarter, which was the country’s highest score since 2005″the start of Nielsen’s consumer confidence index measurement. Germany also reached a milestone: Sentiment increased two points to reach the baseline score of 100. Confidence also increased one point in the U.S. (107), three points in the U.K. (97) and three points in France (60). Conversely, confidence in China decreased one point to 106 from fourth-quarter 2014.
About three-in-10 global respondents (32%) planned to spend on holidays/vacations, new clothes (31%) and out-of-home entertainment (28%), quarterly declines of two, three and two percentage points, respectively. Spending intentions for paying credit cards and debts (25%) and new technology products (24%) held steady from the previous quarter. Millennial respondents”especially those in the 25-29 age range”exceeded the global averages by as much 10 percentage points for these discretionary spending activities. These consumers who are just starting their careers often do not yet have families to support and have more freedom to spend.
Global saving intentions, on the other hand, showed a slight increase of one percentage point each for investing in stocks and mutual funds (22%) and one percentage point for retirement savings (11%) from fourth-quarter 2014. About half of global respondents planned to bank their spare cash (48%), no change from the previous quarter, while 14% said they had no spare cash, up from 13% the previous quarter. More than one-quarter of those aged 55+ said they had no spare cash (22%)”the highest percentage of any age group. A promising sign for the future, however, is that more than half of respondents in the 21-34 age range (53%) said they were saving their money.
U.S. consumer confidence increased one index point in the first quarter to a score of 107, maintaining an above-the-baseline optimism level for a year now. Conversely, confidence declined in Canada six points to 96, which is the country’s lowest score since 2012.
In the U.S., the only confidence indicator that increased in the first quarter was job prospects, rising five percentage points to 55%, while personal finance sentiment and immediate spending intentions declined two percentage points each to 62% and 50%, respectively, from fourth-quarter 2014. Recessionary sentiment reached a new low of 50%, down from 55% the previous quarter and 65% six months ago.
In the U.S., optimism continued to move forward in the first quarter, likely influenced by the addition of nearly 600,000 new jobs and low gasoline prices, which put more money in consumers’ wallet. Consumer spending picked up in the first quarter, with fast-moving consumer goods sales rising 2.5%, compared to an annual increase of only 1.4% during 2014. While 2015 is off to a good start, half of Americans are still in a recessionary mindset, and nearly 35% say they live paycheck to paycheck. As this undercurrent of uncertainty still permeates, consumers continue to think carefully about how and where they spend their money.
Europe remained the least optimistic region globally with an overall index of 77, but there were several signs that green shoots were sprouting in the recession-mired mindsets in the region. Job confidence rose in 15 of 32 markets, while respondents’ personal financial outlooks increased in 18 from fourth-quarter 2014. Confidence for immediate spending intentions, while still comparatively low, increased in 19 markets.
Italy and Greece, two of the region’s debt-ridden and recession-battered countries, both showed confidence increases of 12-points in the first quarter. Italy’s score of 57 was the highest for the country since 2011, and Greece posted a confidence reading of 65″its highest level since 2009.
Several other countries posted their highest confidence scores in several years: The U.K.’s score of 97 reached the highest level since 2006; Ireland (92) reached its highest since 2008, Spain (67) reached its highest since 2010, and Portugal (59) reached its highest since 2006. Conversely, ongoing geopolitical tensions between Russia and the Ukraine likely contributed to new confidence lows reported in these countries. Russia’s index fell for the second consecutive quarter to 72, a level lower than its confidence reading at the height of the Great Recession, and the Ukraine’s score dropped 11 points to 41 in the first quarter.
Consumer confidence in Asia-Pacific increased in nine of 14 markets in the first quarter, compared to only three that rose in the fourth-quarter 2014. Nine markets also remained at or above the 100-baseline level of optimism. India had the highest index score in the region of 130, a one-point increase from the previous quarter and a level that has not been reached since 2011. Confidence in India has been on the rise for six consecutive quarters.
Consumer confidence increased in three of five countries measured in the Middle East/Africa region in the first quarter. At 115, the United Arab Emirates had the highest index in the region, an increase of one point from fourth-quarter 2014. Confidence also increased five points in Saudi Arabia to 107 and one point in Pakistan to 102. Conversely, confidence decreased one point in South Africa to 87 and remained steady in Egypt at 90.
In the region, sentiment about job prospects edged up one percentage point to 44%, while personal finances sentiment and immediate spending intentions remained flat at 60% and 39%, respectively, from fourth-quarter 2014. Job confidence improved most in Egypt, rising three percentage points to 43%, while in Pakistan, the personal financial outlook rose five percentage points from fourth-quarter 2014.
Recessionary sentiment declined in three out of five Middle East/Africa markets: Egypt and South Africa each declined two percentage points to 79% and 70%, respectively, and Saudi Arabia declined one percentage point to 43%.
Regionally, quarter-on-quarter discretionary spending and saving intentions decreased or held steady for most lifestyle categories. Spending intentions for home entertainment expenses, buying new clothes and taking holidays/vacations declined, while intentions for putting money into savings accounts increased and the percentages for investing and saving for retirement were flat from the previous quarter.
Consumer confidence increased two index points in Nigeria in the first quarter to a score of 129″the highest score of the three countries measured in Nielsen’s mobile survey for sub-Saharan Africa. Conversely, confidence decreased nine points in Kenya (104) and three points in Ghana (99) from fourth-quarter 2014.