CURTAILING SPENDS

Consumers anxious on jobs front

Mumbai: Lower levels of optimism around job prospects have pulled down India's consumer confidence by 4 points in the second quarter (Q2) of calendar year 2012, after leading the global index for nine quarters, according to a Nielsen report. During the quarter, Indian consumer confidence declined four points to 119 as compared to 123 in the first quarter of the current calendar year. The level of optimism in Q2 of 2012 is seven points lower than the same quarter last year.

    However, India is the second most optimistic country behind Indonesia, which is ahead of India by merely one point. According to the report, globally, India's consumer confidence remains among the highest of all the countries measured by Nielsen.
    The highlight of Nielsen's survey is that job security (21%) and state of the economy (12%) continue to be the biggest concerns for Indian respondents. Considering there was less optimism around job prospects and personal finances in Q2, Piyush Mathur, president, Nielsen India region, said with every point increase in GDP, there is creation of one million new jobs.
    With India's GDP touching a low of 5.3%, the country appears to have lost out on the opportunity to create 3 million new jobs. Bleak job prospects can lead to consumers tightening their purse strings, leading to a vicious cycle that affects the GDP.
    However, Mathur believes creation of new jobs through investments in new projects and infrastructure can prop up the GDP and lead to a virtuous cycle of raising India's consumer confidence level.
    A positive aspect in Nielsen's consumer confidence index is that cutting down on major household items, or switching to cheaper grocery brands, featured much lower on the list of actions consumers would take in order to save on household expenses. What topped the list was trying to save on gas and electricity, and spending less on new clothes. FMCG, for one, is growing at a healthy 17%. "The drop from the top position for India, after nine quarters, indicates a growing anxiousness amongst Indian consumers today, in relation to the job prospects and spending habits," said Mathur.
    Certainly, rising inflation and fuel prices, which have a direct impact on the consumer's wallet, took a toll on consumer confidence. "Despite the slowdown though, the nominal growth rates are still the envy of the developing world, given the size and scale of the market," said Mathur.
    Pointing out another positive aspect of the global report, Mathur said, "We are not in a globally synchronized recession which was witnessed in 2009, when 48 countries together come down in consumer confidence. This time, however, though 26 countries have come down, almost an equal number of 23 countries have gone up in consumer confidence." The survey, established in 2005, tracks consumer confidence, major concerns and spending intentions among more than 28,000 internet consumers in 56 countries.