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19 January 2006
London, United Kingdom
Consumers’ confidence in their local economies, job prospects and personal finances is on the rise globally, according to a recent survey by ACNielsen, the world’s largest market research company. The ACNielsen Consumer Confidence Index, introduced by ACNielsen last year grew from the average 92 points in May 2005 up to 98 points in November, with two thirds of countries experiencing an increase in consumer confidence.
The world’s most optimistic consumers live in Asia-Pacific and North America while European consumers remain the most cautious for economic recovery. Indian consumers are the world’s most optimistic, while the Portuguese are world’s most pessimistic.
The ACNielsen survey, the largest global survey of its kind was conducted in November 2005, and polled over 23,500 respondents – regular Internet users – in 42 markets in Europe, North and South America, Emerging Markets and Asia Pacific.
“Socially and economically, India continues to develop at a galloping rate compared to the rest of the world. With estimated compounded economic growth rates of over 8%, Indian consumers are enjoying greater spending power today than at any time in their recent history. Life continues to get better for the Indians and consumer confidence is at an all time high” said Frank Martell, CEO ACNielsen Europe. “The impact of outsourcing to India and a new generation of literate and highly employable young adults have resulted in unlimited new opportunities. Growing prosperity among a large young adult population has created disposable incomes of new highs and this reflected in consumer’s positive outlook on employment, job prospects and current spending habits.
And while Europe’s consumer confidence index remains three points below the global average, the latest survey recorded the first faint signs of recovery among European consumers with consumer confidence improving in half of the European countries surveyed. “While Europeans remain cautious overall, many consumers seem to think economic confidence has either hit a plateau or increased slightly.”
“European consumers have definitely experienced three tough years but compared to six months ago, most Europeans do not think things will get much worse in 2006.”
This sentiment reconfirms the European Union Commission’s outlook which also predicted a slow but steady return to economic recovery starting this year. “Our latest survey shows that perceptions of job prospects have considerably improved in Belgium, Netherlands, Sweden, Finland and Spain over the last six months so the trend seems to be on an upward, positive note” said Mr. Martell.
“Consumer confidence sentiment is generally divided into the ‘very good’ or the ‘very bad’” noted Mr. Martell. Norwegians, Danes and Irish are among the world’s most optimistic consumers which is largely a result of their vibrant and growing economies while at the other end of scale, economic recovery sentiments among the Germans, French and Portuguese remain among the gloomiest worldwide.
“Likewise with current and future job prospects, a leading barometer of consumer confidence - the buoyant Nordic nations of Norway and Denmark feature highly in the global top ten ranking for optimistic job prospects, while the Portuguese, French and Germans tip the other end of the scale,” observed Mr. Martell.
Portugal dipped to the very bottom of the global consumer confidence index rating, its index declining by 6 points to 60 from May to November. The number of consumers expecting poor job prospects in Portugal increased from 22 percent to 36 percent, and Portugal is also among the Top 3 most pessimistic countries whose citizens don’t expect much from their personal financial situation and think now is a bad time to spend money.
On job prospects and personal finances globally
The last six months of 2005 certainly bolstered the outlook of American and Canadian consumers, with improved expectations of job security and availability and a more positive outlook on their personal finances. Sixty eight percent of North Americans look forward to good and excellent job prospects over the next 12 months, compared to 54 percent in May 2005 when they were asked the same question. Similarly, more North Americans think now is a good time to buy things they want and need, suggesting increased expectations of personal wealth.
The Irish, who were Europe’s most confident in May, remain optimistic about jobs, but have become less certain about their personal finances and willingness to spend. Globally, the Irish seem to be the most committed to using their spare cash on paying off debts and loans – almost half of Irish respondents (49%) said they would use spare cash to pay off debts.
Latin Americans are generally positive on employment and financial prospects, with 50 to 70 percent of respondents in the four countries expecting to see improvements in the months ahead. Consumer confidence index has increased in all markets in Latam, but remains below the global average in Brazil.
Consumers in Asia-Pacific continue to ride a wave of economic development, with their confidence index increasing in nine out of 13 markets. Indians have made an even bigger leap of faith and remains at the top of the global list with a confidence index at 132 points – nine points ahead of the world’s second ‘most optimistic’ nation, New Zealand. The number of Internet users in India who think job prospects in the country will be not just good, but excellent, doubled from May to November 2005, to 34%.
Even the Japanese and South Koreans, with the lowest confidence indices globally, have improved their forecasts of the future. In Japan, 45 percent more people believe in better job prospects over the next year, compared to the number in May 2005. Although only up to one fourth of respondents in Japan and South Korea lay positive hopes on the future state of their personal finances, opinions have increased that now is a good time to buy things they want and need. Marketers of consumer goods and services, however, shouldn’t expect too much here, for the study shows that Asians are the world’s biggest savers, with 52 percent putting spare money away for a rainy day.
The world is focused on savings
Asian consumers remain the world’s savviest savers and continue to invest the more in shares/mutual funds and retirement funds more than any other region, although Austrians still top the global ranking for retirement funds investment.
In spite of the general growth of consumer confidence and the number of people who believe in a positive financial future for themselves over the next year (driven mostly by Europe and North America), people are still cautious about spending money. The number of consumers optimistic about their financial situation grew from May to November, but so did the number of those who consider the present time NOT good for buying things they want and need, especially in Europe and North America.
Globally, 59 percent of consumers share positive financial expectations, while 61 percent say they would rather not spend money. In addition, more people globally prefer to put their spare money into savings – 40 percent in November vs. 36 percent in May.
People spent more on entertainment in summer
Asking consumers what they do with any money left after covering essential living expenses, the northern equator summer season has clearly left its footprint on spending pattern. Out of home entertainment, new clothes and holidays came out on top of the global list after savings, leaving the practicalities of paying off debts and loans for the northern winter. This trend was mostly driven by European countries.
Europeans remain true to form of neglecting savings, which came fifth (34%) on the priority list after out of home entertainment (38%), clothes (38%), holidays (36%) and home improvements and decorating (35%). When it comes to the last two items, Europeans are the world’s biggest spenders.
It is also interesting to note that in the fashion arena, France has lost its title of the second biggest spender on new apparel, handing it to Spaniards (48%) and Italians (47%). Russians firmly hold leadership, though, with 70 percent of consumers emptying clothes stores!
Asians, Australians and New Zealanders, on the contrary, are mostly focused on savings and paying off debt – the global Top 10 for savings featured Asian countries only. However, holidays came second on the list, with 35 percent of Asia-Pacific Internet users giving their spare cash for relaxation and traveling.
Citizens of the US, Canada and South Africa continued spending mostly on paying off debt, while at the same time keeping themselves entertained out of home. But second to none in out of home entertainment are Latin Americans. Mexico, Argentina, Brazil and Chile all featured among the Top 10 countries with the number of people spending money on entertainment. Mexico is number one globally (56%), closely followed by another hot blooded nation, the Spanish (55%).
Nearly one fourth of Portuguese and US consumers continue to say that they have no money to spend after covering essential expenses. The percent of people saying so declined significantly in the US, and in Brazil (most prominently, from 23% down to 7%), Chile, Denmark, Sweden, Greece, Italy, Australia, New Zealand and South Korea.
Major fears and concerns
Globally, consumers continue to rank their major concerns as the economy, job security and health.
The economy is the biggest concern for most of Asian countries, as well as the US, while job security is the top issue for Latin Americans. Health is the biggest or second biggest concern in Europe and North America with their ageing populations coupled with recent mass media reports of the bird flu migrating to Europe from Asia.
“Some countries in Europe have recorded substantial increases in concern for terrorism and crime in the past six months, especially Denmark, Sweden and the Netherlands. Italy ranks second in the world for being most concerned about terrorism.
The ACNielsen Online Consumer Confidence Survey, the largest twice-yearly global survey of its kind, is aimed to gauge consumers’ current confidence levels, spending habits/intentions and current major concerns. The most recent wave of the survey took place last month (November 2005) and polled over 23,500 consumers – regular Internet users – in 42 markets in Europe, North and Latin America, Asia-Pacific region, Africa (Republic of South Africa) and the Middle East (UAE).
About ACNielsen
ACNielsen, a VNU business, is the world's leading marketing information provider. Offering services in more than 100 countries, the unit provides measurement and analysis of marketplace dynamics and consumer attitudes and behavior. Clients rely on ACNielsen's market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns.
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