Sentiment on Business Conditions Weakens
Consumer confidence fell for the third consecutive month in November to the lowest on record, as consumers continued to downgrade their expectations for the future path of the economy as well as their personal finances.
The MNI India Consumer Sentiment Indicator fell slightly to 113.7 in November from 114.1 in October, the lowest level since the start of the survey in November 2012. Sentiment has been in trend decline over the past year and has fallen sharply since April in spite of aggressive action from the central bank to boost economic growth this year.
Almost 93% of respondents said they used the majority of their income on daily expenses, with very little to save or invest. In spite of the low level of recorded inflation, prices have been a persistent issue among respondents. In November, respondents were the least satisfied with the current level of prices since August 2014.
While views on current conditions increased slightly in November, they remained close to historical lows, while expectations for the future were the bleakest on record.
The driving force behind the November fall in sentiment was a sharp drop in expectations for business conditions in one year. Expectations about longer term business conditions hit a record low while respondents also revised lower their views on the current business situation. Clearly our panel are not convinced that either rate cuts or steps taken by the government to promote growth will have a significant impact. Our sister business survey also paints a similar picture with business confidence in November plummeting to the lowest since February 2014.
On a more positive note, consumers were more upbeat about their current personal finances and sentiment towards purchasing a large household good increased for the fifth consecutive month, although part of this may be seasonal. Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, “The decline in consumer sentiment to a new record low in November underlies just how far sentiment has fallen over the past year and a half. While it is difficult to find positives in the latest data, the sizeable jump in Current Personal Finances provides some hope that we are nearing the bottom.”
The MNI India Consumer Sentiment Survey is a wide ranging monthly survey of consumer confidence across India.
Data is collected via telephone interviews. At least 1,000 interviews are conducted each month. The survey has been in place since November 2012. The survey adopts a similar methodology to the University of Michigan survey of U.S. consumer sentiment.
The main MNI India Consumer Indicator is derived from five questions, two on current conditions and three on future expectations:
- Current personal financial situation compared to a year ago
- Current willingness to buy major household items
- Personal financial situation one year from now
- Overall business conditions one year from now
- Overall business conditions for the next 5 years
Indicators relating to specific questions in the report are diffusion indices with 100 representing a neutral level, meaning positive and negative answers are equal. Values above 100 indicate increasing positivity while values below show increasing negativity.
MNI Indicators specialises in producing business and consumer surveys designed to present an advance picture of the economic landscape and highlight changing trends in business and consumer activity. The timely reports explore attitudes, perspectives and sentiment across the globe, including China, India and Russia. Alongside MNI Indicators’ core focus on consumer and business surveys in emerging markets, MNI Indicators produces the renowned Chicago Business Barometer (Chicago PMI), a key leading indicator of the US economy. MNI Indicators is part of MNI, a leading provider of news and intelligence and a wholly owned subsidiary of Deutsche Börse AG, one of the largest worldwide exchange organisations.