The outcome of the municipal elections in August may have contributed to the recovery in consumer confidence levels for the third quarter, says FNB.

The FNB and Bureau of Economic Research (BER) consumer confidence index improved to -3 in the third quarter. This is below the long-term average of 4, but it improved significantly from -11 reported in the second quarter.

This is the highest index recorded since the fourth quarter of 2014.

In a statement, Jason Muscat, senior economic analyst at FNB, said that the “free and fair” completion of the municipal elections and the final outcome may have “bolstered” confidence levels and expectations for the future.

This can be seen particularly in provinces where the DA gained control through coalition governments, according to the report. After August's local government elections, the ANC lost control of major metros such as Johannesburg, Tshwane and Port Elizabeth.

Confidence levels in the Eastern Cape, where the DA gained control of Nelson Mandela Bay, were up from 0 to 29 index points. Similarly in Gauteng, where the DA gained control of the City of Johannesburg and the City of Tshwane, recovered from -6 to 5.

However, the BER's retailer confidence index which boosted from 26 to 43 in the third quarter, declined to 34 in the fourth quarter. This may indicate that the election boost to consumer sentiment may turn out to be fleeting.

Muscat added that the appreciation of the rand in mid-August to R13.50 to the dollar, and the 9% drop in the petrol price in July and September also improved purchasing power and subsequently confidence levels.

Additionally more people (288 888) entered employment in the third quarter, according to the Quarterly Labour Force Survey conducted by Statistics South Africa (StatsSA).

In the past year, the poorly performing economic growth, both domestically and globally, has impacted confidence levels. Other contributors include political uncertainty, the impact of the drought, the depreciation of the currency and increasing food prices and limits placed on credit extensions by financial service providers.

However, the prospects of an improved economic outlook in the next 12 months and subsequently the improved financial status of households boosted consumers’ expectations.   

The economic outlook index improved by 13 index points to -4. The expected financial position index increased by 12 index points to 16. 

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