Consumers do not believe now is a good time to be buying durable goods, such as cars, furniture and appliances.

This is according to the FNB and Bureau of Economic Research (BER) report on the consumer confidence index for the third quarter. The consumer confidence index recovered from a low of -11 recorded in the second quarter to -3. This is the highest index level since the fourth quarter of 2014.

Although expectations for an improved economic outlook and better prospects for the financial status of households contributed to the recovery in the index, consumers are still holding back on purchasing big ticket items.

“There has been very little positive news on the economic front that would have translated into a significant improvement in the actual spending power of consumers over the festive season,” said Jason Muscat, senior economic analyst at FNB.

The present time indicator, which looks at whether it is currently a good time to buy durable goods, declined from -19 to -21 for the third quarter. 

"Durable goods sales volumes have come under severe pressure from rising interest rates, higher prices for imported durable goods on the back of a sustained weak rand exchange rate,” said Muscat.

Further, financial service providers have placed stringent affordability checks before extending credit. Credit extensions to households contracted by 2.3% year-on-year (yoy) during the third quarter of 2016, according to statistics from the South African Reserve Bank (Sarb). This is 1.7 percentage points more than the contraction of 0.6% in the second quarter.

The report indicated that high income consumers, earning more than R7 000 per month, feel less optimistic about durable goods purchases than low income consumers, those who earn less than R7 000.

This particularly would have a negative impact on the purchase of new vehicles, furniture and appliances by high-income consumers. The declining rate of new car sales increased from 12.8% yoy in the second quarter to 16% in the third quarter. For furniture and household appliances sales, the rate increased from 3.1% in the second quarter to 5.8% in the third quarter.