Global online consumer confidence plunges to lowest level in six quarters

And 45% of Asia Pac online consumers said they are currently in recession.

Global online confidence declined to its lowest level in six quarters to 89 as economic recovery hit a stumbling block and recessionary jitters again reverberated around the world, according to Nielsen’s quarterly Global Online Consumer Confidence Survey.

“There wasn’t enough positive news to inspire confidence among global online consumers in the second quarter,” said Dr. Venkatesh Bala, Chief Economist at The Cambridge Group, a part of Nielsen. “Weak economic figures, slowing manufacturing performance and inflation in Asia, an intensifying debt crisis in Europe and continuing political instability in the Middle East combined with rising household expenses in the U.S. have taken their toll on consumers’ fragile confidence. Hopes for full global recovery in the next 12 months substantially weakened in Q2 as the majority of consumers around the world remained in a recessionary mindset.”

The Nielsen Global Online Consumer Confidence Survey, established in 2005, tracks consumer confidence, major concerns and spending intentions among more than 31,000 Internet consumers in 56 countries. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism.

In the latest round of the survey, conducted between May 20 and June 7, 2011, regions of the Middle East/Africa and Asia Pacific posted the steepest declines of 12 and nine points respectively compared to last quarter, but current figures are aligned with year-ago trends. And confidence levels in Europe (74) and Latin America (91) remained largely unchanged edging up one index point each. Despite its nine point dip, Asia Pacific remained the most optimistic region at 98 points, followed by Middle East/ Africa at 94 points.

“Second quarter data revealed that consumers have retreated back into a recessionary mindset and they are tightening their belts again after the last 12 months of slowly improving, but cautious spending,” said Dr. Bala.

“According to the latest survey, consumer allocation intentions declined globally in all discretionary areas from investing in stocks and buying clothes to taking holidays and upgrading technology compared to three months ago. For the outlook to improve for the rest of the year, consumers globally will look to greater stability in food and energy prices, as has begun to occur recently, along with abatement of region-specific concerns.”

In another indication of how consumers are prolonging the recession sentiment, 58 percent of global online consumers said they are still in a recession – the most in the past year. Of those, more than half (51%) believe they will still be in a recession in a year’s time. The number of Asia Pacific online respondents who said they are currently in recession rose from 37 percent in Q1 2011 to 45 percent in Q2. And in Middle East/Africa, the economic recession lives on for 74 percent of online respondents – an increase of nine points from three months ago.

Slowdown Impacts Outlook, But Asians Remain Optimistic

Eight out of 14 Asia Pacific markets posted quarterly declines in Q2 with steepest declines from Australia (-7 points) and Singapore (-6 points). Australia’s index has been on the decline since Q3 2010. “Australian households are being hit hard with unrelenting price increases across the board. From July 1, households will be hit by one of the biggest rises in the cost of living in decades – utility bills. These are set to soar with electricity, water and gas prices all increasing,” said Chris Percy, Managing Director, Nielsen Pacific.

“And the January floods, which restricted supplies of fruit and vegetables, had lingering effects on produce costs, causing food prices to rise. Belt-tightening is the norm for many households as price increases erode family budgets.”

Malaysia (110), New Zealand (97), Philippines (115) and South Korea (52) posted quarterly confidence increases and Hong Kong (107) remained flat. China’s consumer declined three points quarterly to 105 and is four points off its year ago index of 109. “The slight drop in consumer confidence in China is reflective of inflation, which is still a top-of-mind issue for consumers. While inflation has continued to creep up in the last three months, there aren’t any signs of slowdown in consumption – even in discretionary categories, as observed in the second quarter of 2011. The continued strength in domestic consumption is a reflection of continued overall optimism in the economy, driven by growth in income levels,” said Karthik Rao, Managing Director, Nielsen Greater China.

Photo from Marilyn M