Sept. 12 (Bloomberg) -- South African consumer confidence dropped to a two-year low in the third quarter as the economic recovery lost momentum, reducing households’ appetite for continued spending, First National Bank said.
The FNB/BER consumer confidence index dropped to 4 from 11 in the second quarter, First National Bank and the Bureau for Economic Research said in an e-mailed statement today.
Consumers account for about two-thirds of expenditure in Africa’s biggest economy and a drop in spending may undermine economic growth, which slowed to a two-year low of 1.3 percent in the second quarter, according to the statistics office. The South African Reserve Bank, which makes its next interest rate decision on Sept. 22, has kept the benchmark interest rate unchanged at 5.5 percent this year to help spur spending.
“More consumers expect the economic performance to deteriorate and some of these foresee that this will also hurt their own finances over the next 12 months,” FNB said in the statement. “Consumer spending is likely to moderate should consumer confidence remain at this lower level in subsequent quarters.”
The sub-index measuring consumers’ views of expected economic performance dropped to 2 in the third quarter from 17 in the previous three months, the biggest decline since the second quarter of 2008, when the global financial crisis began, FNB said.
Retail sales rose 2.2 percent in June from a year earlier, after increasing 0.2 percent in the previous month, the statistics office said on Aug. 17. Sales growth slowed from 10 percent in April.
Pick n Pay Stores Ltd., South Africa’s second-biggest grocer, said on July 6 it may fire about 8.6 percent of its workforce after profit slumped. Retailers are facing greater competition after Wal-Mart Stores Inc. bought a 51 percent stake in Johannesburg-based Massmart Holdings Ltd. in June.
--Editors: Heather Langan, Vernon Wessels
To contact the reporter on this story: Nasreen Seria in Johannesburg at firstname.lastname@example.org.
To contact the editors responsible for this story: Andrew J. Barden at email@example.com.