Consumer Confidence Index
What is it?
• Measures consumers sentiment about their
personal financial situation and that of the
country as a whole.
– Own financial situation (present and future)
– Employment
– Spending intentions
– Assessment of the general economic conditions
The Rationale
• Personal consumption expenditure - driver of
GDP growth
• Spending is a function of:
– Current and expected income
– Current and expected prices
• The CCI seeks to forecast consumer spending
through a survey of consumer sentiment
Features of the CCI
• The CCI may be related to macroeconomic
variables such as inflation
• Ex: Confidence is boosted by lower inflation,
lower interest rates and higher real income
(the reverse may also be true)
• Enterprises can make use of consumer
confidence index
OECD Area
Consumer Confidence
Index
Real GDP growth
Consumer Confidence Measure Indicator
• Frequency: monthly
• Published at: ISET-PI web site (http://www.iset-pi.ge/)
• Start date: May 2012
Consumer Confidence Measure Indicator
• 300-350 interviewed respondents per month
– Compared with:
• U.S. - 5,000 respondents
• Czech Republic - 1,000 respondents
• Germany – 2,000 respondents
• Randomly generated mobile phone numbers
• Same person can not be interviewed twice
during the year.
• Response rate: 80%
Measuring the Index
• 15 questions about:
– Current financial standing of household , past and
next 12 months
– General economic situation, past and next 12 months
– Consumer prices, past and next 12 months
– Employment conditions for the next 12 months
– Current saving environment, general
– Saving intentions, next 12 months
– Likelihood of purchasing a car, next 12 months
– Likelihood of purchasing a house, next 12 months
– Likelihood of making home improvements, next 12
months
Compiling the Index
• The consumer confidence indicator is the arithmetic average of
the balances (in percentage points) of the answers to those 15
questions.
• How balances are calculated?
• Q8: In view of the general economic situation, do you think that now it is
the right moment for people to make major purchases such as furniture,
electrical/electronic devices, etc.?
+
yes, it is the right moment now
=
it is neither the right moment nor the wrong moment
−
no, it is not right moment now
25%
40%
35%
N don’t know
0%
• Balance=25%-35%=-10%
(ignore 40% of neutral responses)
Compiling the Index
• In case of questions with five or six options
Q14: Are you planning to buy or build a home
over the next 12 months?
++
+
−
−−
Yes, definitely
Possibly
Probably not
No
N don’t know
10%
15%
30%
35%
10%
Balance = (PP + 0.5P) −
(NN + 0.5N)
Balance=(10%+0.5*15%) −
(35%+0.5*30%)
=-32.5%
Compiling the Index
• Q2: How do you expect the financial position
of your household to change over the next 12
months? It will...
++
+
=
−
−−
get a lot better
get a little better
stay the same
get a little worse
get a lot worse
N don’t know
15%
12%
28%
35%
7%
3%
Balance=(15%+0.5*12%)(7%+0.5*35%)
=3.5%
Note: Ignore neutral and
don’t know answers
Compiling the Index
• We calculate following indices:
– Overall CCI index
– Present situation index
– Expectations index
Consumer Confidence Index results
Consumer Confidence Index (CCI)
-10.0%
-14.9%
-16.2%
-15.0%
-16.8%
-18.2%
-18.4%
-18.5%
-20.0%
-22.4%
-20.0%
-21.8%
-23.4%
-22.5%
-25.0%
-25.2%
-26.8%
-26.4%
-26.3%
Jul-12
Aug-12
Sep-12
-30.0%
May-12
Jun-12
Overall CCI
Present situation index
Expectations index
Consumer Confidence Index results
Consumer Confidence Index (on a scale of -100%; +100%):
Tbilisi vs. Rest of Georgia, September 2012
40%
30%
Tbilisi
20%
Rest of
Georgia
24%
28%
10%
0%
-10%
-7%
-1%
-20%
-23% -22%
-30%
-40%
-50%
-60%
-53% -53%
Current financial
Change in
Expected change
Agregated
situation (saving financial situation
in financial
Consumer
or borrowing?) (last 12 months) situation (next 12 Confidence Index
months)
Consumer Confidence Index results
Compared to the past 12 months, do you expect to spend more or less
money on major purchases?
September 2012
42%
36%
24%
27%
24%
19%
18%
20%
7%
2%
much more
a little more
about the same
Secondary
a little less
Higher
much less
September, 2012
Consumer Confidence Index
1
2
3
4
5
Overall CCI
Present Situation Index (2)
Expectations Index (3)
How has the financial situation of your household changed over the last 12
months?
How do you expect the financial position of your household to change over the
next 12 months?
How do you think the general economic situation in the country has changed
over the past 12 months?
How do you expect the general economic situation in this country to develop
over the next 12 months?
How do you think that prices have changed over the last 12 months?
6 how do you expect that prices will change in the next 12 months?
7 How do you expect the number of people unemployed in this country to change
over the next 12 months?
8 do you think that now it is the right moment for people to make major
purchases?
9 Compared to the past 12 months, do you expect to spend more or less money on
major purchases?
10 In view of the general economic situation, do you think that now is it good or bad
moment to save?
11 Over the next 12 months, how likely is it that you save any money?
12 What is current financial situation of your household, able to save or have to
borrow?
13 How likely are you to buy a car over the next 12 months?
14 Are you planning to buy or build a home over the next 12 months?
15 How likely are you to spend any large sums of money on home improvements or
renovations over the next 12 months?
Total
-22.5%
-16.8%
-26.3%
m/m
changes (1)
-0.7%
-1.9%
0.1%
Tbilisi
-23.2%
-19.0%
-26.0%
Rest of
Georgia
-22.1%
-15.7%
-26.4%
-2.9%
4.5%
-7.2%
-0.6%
26.6%
3.8%
23.7%
28.2%
20.1%
4.4%
11.9%
24.6%
32.7%
0.2%
26.3%
36.2%
-57.0%
5.2%
-62.4%
-54.1%
-5.4%
5.1%
-6.7%
-4.7%
-16.9%
-22.1%
-19.1%
-15.7%
4.0%
-16.0%
12.4%
-0.6%
-9.9%
2.1%
-15.5%
-6.9%
-12.4%
-2.7%
-16.0%
-10.5%
-68.2%
6.7%
-62.4%
-71.3%
-52.9%
-6.6%
-52.6%
-53.0%
-64.0%
7.7%
-55.7%
-68.5%
-78.2%
3.2%
-70.6%
-82.3%
-53.1%
-5.9%
-54.1%
-52.5%
Our future objectives
• Implement the EU harmonized survey
programme of Business and Consumer
Surveys
•
•
•
•
Industrial confidence indicator
Services confidence indicator
Retail trade confidence indicator
Construction confidence indicator
• Economic Sentiment Indicator
• Industry - 40%, Services - 30%, Consumers - 20%, Construction
- 5%, Retail trade - 5%
Thank You
For Attention