Consumer Payment Card News

Consumer Confidence Ranging from Optimism to Pessimism is All Over the Map in 2019

Consumer confidence is a mixed bag around the globe for the start of 2019. Consumer confidence in the U.S. is “rebounding,” while the U.K. is “weak,” “rising” in Australia, “strong” in Canada, down to the “lowest level in more than two years” in Japan, and “pessimistic” in India.

Consumer Confidence

While the government shutdown affected the U.S. economy bigly, Brexit negotiations are impacting consumer confidence in the U.K., and the Asian economic forecasts is rattling the Japanese. Trade tariff concerns are concerning to consumers worldwide.

U.S.A. Confidence

Following three months of consecutive declines U.S. consumer confidence rebounded in February, The Conference Board Consumer Confidence Index increased in February to 131.4, up from 121.7 in January.

The strong economy with low unemployment is reducing the need for consumer credit, but bankers see a reversal in near future. Additionally, the Consumer Debt Service Ratio & Debt Financial Obligations Ratio has been declining slightly, according to analysis by RAM Research.

The Conference Board Present Situation Index – based on consumers’ assessment of current business and labor market conditions – improved, from 170.2 to 173.5. The Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – increased from 89.4 last month to 103.4 this month.

Consumers’ appraisal of current conditions improved moderately in February. Those stating business conditions are “good” increased from 36.4% to 41.2%, while those saying business conditions are “bad” was unchanged at 10.8%. Consumers’ assessment of the labor market was mixed. Those stating jobs are “plentiful” decreased slightly from 46.7% to 46.1%, while those claiming jobs are “hard to get” also decreased, from 12.6% to 11.8%.

According to the Federal Reserve, revolving consumer credit outstandings (mostly credit card) stood at $1044.6 billion for end-of-year (EOY) 2018, compared to $1024.9 billion for EOY 2017, and a revised $969.4 billion for EOY 2016. At the end of the fourth quarter of 2018, revolving consumer credit stood at $1044.6 billion.

U.K. Confidence

The GfK consumer confidence index in the UK held at -14 in January 2019, its lowest since July 2013 and slightly above market expectations of -15, as concerns about Brexit negotiations persist. Households’ assessment of their personal finances improved due to falling inflation and higher wages and employment, while their outlook on the economy over the next 12 months was the weakest since December 2011 (-39 vs -38).

Consumer Confidence in the United Kingdom averaged -9 Index Points from 1981 until 2019, reaching an all time high of 10 Index Points in June of 1987 and a record low of -39 Index Points in July of 2008.

British credit card lending noses down a tad more. According to the latest consumer credit statistics from the Bank of England (BOE), annual consumer credit growth slowed to 6.6% in December, reflecting the continuation of relatively weak flows of new lending. The net monthly flow in December fell to £0.7 billion, reflecting less extra borrowing on credit cards.

Analysis by RAM Research reveals credit card lending growth (seasonally adjusted) has been slowing eroding throughout 2018, from 9.4% YOY in January to 7.1% YOY for December.

Australia Confidence

The Melbourne Institute and Westpac Bank Consumer Sentiment Index for Australia rose 4.3% month-over-month to 103.8 in February from 99.6 in the previous month.

The survey’s measure of economic conditions for the next 12 months climbed sharply (+7.0 points to 103.0), and the measure for the next five years advanced by 3.8 points to 100.2 . Also, both family finances subindices improved in February: vs a year ago by 5.6 points to 89.4 and next 12 months by 5.5 points to 107.8. Additionally, the time to buy a major household item index increased by 0.3 points to 118.6.

Consumer Confidence in Australia averaged 101.36 Index Points from 1974 until 2019, reaching an all time high of 123.94 Index Points in May of 2007 and a record low of 64.61 Index Points in November of 1990.

CardTrak notes Australians are cutting up their fantastic plastic to the tune of 66,000 credit cards per month. In December Aussies closed 60,000 credit card accounts, totally 790,000 over the course of 2018.

Additionally, credit card debt and cash advances on fantastic plastic declined again in December, declining in each month of 2018.
The amount Australians owe declined 1.9% year-on-year (YOY) in December, compared to a YOY decline of 0.2% in November, according to the Reserve Bank of Australia.

Canada Confidence

Consumer Confidence in Canada decreased to 54.12 Index Points in February from 54.17 Index Points in January of 2019. Consumer Confidence in Canada averaged 53.44 Index Points from 2010 until 2019, reaching an all time high of 57.05 Index Points in November of 2018 and a record low of 46.80 Index Points in February of 2016.

Canadian credit card purchase dollar volume (PDV) for Visa Mastercard payment cards (credit cards + debit cards) posted weaker than expected performance in the fourth quarter (4Q/18) up 5.5% on a nominal basis or 8.3% currency adjusted (FX) year-on-year (YOY). Sequentially, nominal and FX YOY increases were 4.9% and 9.9%, respectively,

Canadian payment cards-in-force (CIF) increased 10.3% YOY to 128 million for 4Q/18, compared to 10.4% YOY in the prior quarter, according to figures gathered by CardData.

Japan Confidence

The Consumer Confidence Index in Japan fell to 41.9 in January 2019 from 42.7 in the previous month and below market expectations of 42.5. This was the lowest reading since November 2016, amid a deterioration in households’ perceptions on employment (down 1.5 points to 44.3), willingness to buy durable goods (down 1.1 points to 41.7), overall livelihood (down 0.5 points to 40.1) and income growth (down 0.3 points to 41.4).

Consumer Confidence in Japan averaged 42.27 Index Points from 1982 until 2019, reaching an all time high of 50.80 Index Points in December of 1988 and a record low of 27.50 Index Points in January of 2009.

India Confidence

The Reserve Bank of India reports the December 2018 round of its Consumer Confidence Survey (CCS). Consumer confidence turned around in the December 2018 round with the current situation index (CSI) gaining 2.8 points, though still remaining in pessimistic territory.

The future expectations index (FEI) recorded a sharp uptick, with increased optimism about the general economic situation and employment scenario

The survey was conducted in 13 major cities – Ahmedabad; Bengaluru; Bhopal; Chennai; Delhi; Guwahati; Hyderabad; Jaipur; Kolkata; Lucknow; Mumbai; Patna; and Thiruvananthapuram.