Asian consumers less confident, but still spending: Nielsen

Thursday, 19 July 2012 00:00 - - {{hitsCtrl.values.hits}}

SINGAPORE: While confidence levels among Asian consumers have continued dropping in the second quarter of the year, they remain more optimistic than most of their global counterparts, according to Nielsen.

Nielsen’s Q2 2012 consumer confidence index recorded a score of 95 for Asia, down two points from the first quarter.

Confidence levels fell in most markets across the region, with the exception of Indonesia, Malaysia, Hong Kong, Vietnam and South Korea. Malaysia posted the strongest gain, up four points from the first quarter.

Despite a modest increase, South Korea’s confidence level was the lowest after Japan with scores of 57 and 50, respectively. Nevertheless, confidence levels in Asia scored three points above the global consumer confidence score of 91. A number of markets ranked amongst the most confident countries globally, with Indonesia topping the list, followed by the Philippines (second) and Malaysia (fifth).

“Continuing economic uncertainty is clearly impacting consumers’ confidence levels across the region,” said Therese Glennon, Nielsen’s managing director of Consumer Insights in the APMEA Region. “Global events including a worsening Euro zone crisis, coupled with slowing growth rates in China and India, impacted financial markets and consumer sentiment in many parts of Asia.” Behind the consumer confidence index, Nielsen found that Asian consumers were less confident about job prospects, with only 50 per cent of Asian consumers feeling that their local job prospects in the next year were ‘good or excellent’, down two percentage points from the previous quarter and a drop of seven percentage points from a year ago. Still, more than half (55 per cent) of online consumers in Asia considered their personal finances over the next 12 months to be good or excellent, down one percentage point from Q1 2012 and down two percentage points from the same quarter last year. Unsurprising considering 18 per cent of respondents indicated their top concern was the economy and for 15 per cent, job security.

Nevertheless, consumers across Asia are not pulling back severely on discretionary spending. When asked how they intended to spend their spare cash, nearly a third said they would take a holiday, 27 per cent said clothing, and 24 per cent said technology. All categories registered only slight or no declines from the previous quarter. Long-term however, the survey showed that nearly three-quarters of consumers in Asia were changing their spending to save on household expenses by cutting back on new clothes (52 per cent), cutting down on out-of-home entertainment (47 per cent) and saving on gas and electricity (45 per cent). “Whilst consumers in Asia are still out there shopping and enjoying entertainment outside of their

homes, they are adopting a much more conservative approach, and are more conscious of the amount they are spending on such items during these uncertain times,” Glennon notes. “More than ever, we expect consumers to seek out promotions to stretch their cash further.”