The NOIPolls Consumer Confidence Index for Q3, 2017 experienced a 2.7-point increase to stand at 67.5-points from 64.8-points in Q2, 2017. This indicates an increase in the degree of optimism of consumers on the state of the economy which is generally expressed through their saving and spending patterns. Therefore, this increase may likely translate to a slight growth in the economy as people have shown a relatively positive attitude towards spending. Although the quarterly increase in the CCI of 2.7-points is not particularly large, it is sufficient to push the consumer confidence index to its highest point since Q1, 2017. The FBN Capital Purchasing Manager’s Index (PMI) also revealed an increase of 1.4-points when the average of Q2 (56.3%) is compared to that of Q3 (57.7%) 2017.
Additionally, the two independent variables that make up the CCI; the Present Situation Index (PSI) and the Expectation Index (EI) also experienced some changes. The PSI experienced an increase of 6.1-points from the results of Q2, 2017 (38.1-points) to stand at 44.2-points in Q3, 2017. Contrarily, the EI experienced a marginal 0.3-point decrease to stand at 84.6-points. These are the key highlights from the Q3, 2017 Consumer Confidence Index Survey.
The NOIPolls Consumer Confidence Index provides consumer assessments of the economic situation and their intentions and expectations for the future. The NOIPolls Eagle 30 Business Confidence Index measures business leaders’ perceptions and expectations about the Nigerian business environment using the top 30 companies in the country.
Nigerian businesses, financial and government agencies largely depend on these perceptions and micro assessment of consumers’ expectation in making decisions. At best, they draw the conclusion on the business environment based on information from their immediate surroundings while the minorities conduct surveys that are time and money consuming. However, the introduction of these indices provides indicators that will ensure stakeholders can detect and respond to changes in consumer behaviour, the economy, and the business environment in Nigeria.
This report presents the Q3, 2017 results for the NOIPolls Consumer Confidence Index (CCI).
THE NOIPOLLS CONSUMER CONFIDENCE INDEX (CCI)
The NOIPolls Consumer Confidence Index (CCI) in Q3, 2017 experienced an increase of 2.7-points to stand at 67.5-points. Like the upturn experienced in the previous quarter of the year, Nigerian consumers’ confidence further gained momentum in Q3, 2017indicating increased buoyancy in the purchasing confidence of citizens which is capable of stimulating more economic activities in the country. The increase in the index has mainly been driven by a rising optimism amongst Nigerian households regarding the current economic situation. This result proved that consumer expectations concerning future economic developments have improved modestly.
The two variables that make up the NOIPolls Consumer Confidence Index include the Present Situation Index (PSI) and the Expectation Index (EI). The Present Situation Index is based on how consumers feel about their current financial circumstance compared with 1 month ago, as well as their perception of the current buying environment for large household purchases in relation to their total family income. The Expectation Index is based on consumers’ perceptions of their future (3 months) financial situation, their economic outlook for the country as a whole and employment expectations.
The general rise in the Consumer Confidence Index in Q3, 2017 has been driven by optimistic consumers’ opinions on their Present Situation Index (PSI). According to the Q3, 2017 findings, the PSI increased by 6.1-points to stand at 44.2-points from 38.1-points obtained in Q2, 2017. This shows that consumers appear to feel particularly optimistic about buying with overall sentiment towards household purchases in accordance with their present situation. On the other hand, the expectation index decreased slightly by 0.3-point from 84.9-points in Q2, 2017 to stand at 84.6-points in Q3, 2017.
There are 7 variables that comprise the PSI and EI and 4 of these variables experienced positive increase, while 3 of the variables – Expected Country’s Economic Situation, Expected Employment Condition and Expected Total Family Income indices experienced a decline. These are highlighted below;
Current Economic Situation Index–46.6
The Current Economic Situation Index increased from 42.2-points in Q2, 2017 to 46.6-points in Q3, 2017. This indicates a 4.4-point increase signifying that consumers are optimistic about the country’s current Economic Situation.
Expectation of the Country’s Economic Situation Index –93.4
The Expectation of the Country’s Economic Situation Index decreased by 1-point from 94.4-points obtained in Q2, 2017 to stand at 93.4-points.
Current Employment Condition Index – 54.6
The Current Employment Condition improved from 53.4-points in Q2, 2017 to 54.6-points in Q3, 2017. This represents a 1.2-point increase indicating a slightly improved perception about consumers’ present employment status.
Expected Employment Condition Index – 98.0
The Expected Employment Condition Index decreased by 0.4-point to stand at 98-points in Q3, 2017. Although the index decreased, it still remains the highest index, indicating that Nigerian consumers are highly expectant of improvements in their employment conditions.
Current Prices of Goods and Services Index – 31.6
The Current Prices of Goods and Services Index, again, experienced the highest increase of 12.8-points in Q3, 2017 to stand at 31.6-points from 18.8-points recorded in Q2, 2017.
Expectation of Prices of Goods and Services Index – 81.95
The Expectation of Prices of Goods and Services Index increased by 2.4-points from 79.6-points in Q2, 2017 to stand at 82-points in Q3, 2017, meaning that there is a high anticipation among the Nigerian consumers for the future reduction in the prices of goods and services.
Expected Total Family Income Index – 65.3
The Expected Total Family Income Index declined by 1.8-points to stand at 65.3-points from the 67.1-points recorded in Q2, 2017, suggesting that expectations regarding the future financial income of households are declining.
Trend analysis showed that the PSI increased by 6.1-points to stand at 44.2-points in Q3, 2017, while the EI decreased by 0.3-point to stand at 84.6-points in Q3, 2017. These variances are the chief determinants of the overall results of the CCI for each quarter.
In conclusion, the NOIPolls Consumer Confidence Index increased by 2.7-points to stand at 67.5-points in Q3 2017. This signifies an increased confidence on the general economic outlook of the country by consumers and this positivity could create a positive multiplier effect on the country’s gross domestic products (GDP). In addition, the Present Situation Index (PSI) experienced an increase of 6.1-points to stand at 44.2-points while the Expectation Index (EI) experienced a decrease of 0.3-point to stand at 84.6-points in Q3, 2017. Also, 4 of the indices that make up the PSI and the EI experienced an increase while the remaining 3 – the Expected Country’s Economic Situation, Expected Employment Condition and Expected Total Family Income indexes experience a decline.
The increase experienced in the CCI of Q3, 2017 infers that consumers’ assessment of their present conditions is relatively positive and their short-term (3 months) expectations suggest that they are hopeful the economy will improve. The increase in the CCI also depicts that Nigerian consumers are willing to spend their money. If this willingness to spend is sustained, it would have a positive effect on the economy therefore, there is every reason to expect consumption to grow in the coming months and quarters.