Consumer confidence in the UAE increases

UAE consumer confidence continues to show signs of recovery but the country still has the most cautious outlook on the job market and business environment among its regional peer.

The Consumer Confidence Index (CCI), a quarterly survey conducted by Bayt.com in conjunction with research firm YouGov, saw the UAE move up by 9.3 points, continuing the country's course of improved consumer confidence from last quarter.

However, a majority of respondents in the UAE claim their financial situation is worse than last year. Respondents in Qatar, Egypt and Algeria on the other hand are most satisfied with their current financial situation, said the survey.

While all countries reported low availability of jobs, the UAE and Kuwait are the most pessimistic among all countries about the current business environment, said the survey, obtained by Emirates Business.

The CCI, which measures consumer expectations and satisfaction on inflation, job opportunities and the cost of living, also asked the respondents about their personal financial situation and whether they felt they were better or worse off than 12 months ago.

About 40 per cent of UAE respondents said they were worse off – the highest figure among all surveyed countries.

Only 21 per cent of respondents said they were better off than last year. Although the survey puts the UAE as the most adversely affected nation, the country is most optimistic when it comes to economic health in the near future. With regard to career satisfaction, the UAE, followed by Egypt and Bahrain, expressed the biggest fears, while residents of Tunisia, Algeria and Syria felt most secure.

Bahrain, Qatar and Saudi, meanwhile, hold a positive outlook regarding their personal finances in the coming year.

Kuwait, followed by Qatar, the UAE and Saudi, feel business conditions will be better next year. Kuwait, Qatar and the UAE expect some improvement in the employment opportunities. Egypt and Jordan on the other hand hold a pessimistic view.


Investment and purchases

Albeit recovery is in the air, respondents across all countries said it is not a good time to make purchases.

This has largely to do with another finding that all countries – which include Algeria, Bahrain, Egypt, Jordan, Kuwait, Lebanon, Morocco, Qatar, Saudi Arabia, Syria, Tunisia and the UAE – said salaries are not keeping pace with cost of living. All nations are mostly neutral about being able to keep up with staffing requirements. However, the UAE and Tunisia are pessimistic.

Investments-wise, a majority of respondents (56 per cent) said they do not plan to purchase a vehicle. The trend continues with a majority of respondents not interested in making any investment in property. In the UAE, 70 per cent said they would not be buying any property. Cost of real estate is still creating a feeling of negativity in all countries and Jordan, Syria, the UAE and Bahrain are the most concerned.

With regard to purchase of electronic appliances, respondents from UAE expressed a lower purchase intention across all items.

When asked whether it is a good time to buy consumer durables or not, respondents said they are reluctant to spend – 42 per cent said it was a bad time to buy goods such as televisions or refrigerators, 30 per cent said it was a neutral time, while a fifth agreed that it was a good time to buy.

The survey showed that propensity to consume varied from country to country.

Moving highest up the propensity to consume index by 13.2 index points was the UAE. Kuwait and Qatar also showed significant improvements in propensity to consume, moving up the index 11.1 and 9.4 points respectively.

Unlike the previous survey when it showed an improvement, Algeria moved down the index by 5.1 index points – the largest fall among the surveyed countries. Lebanon, which previously saw a drop, moved up the index by 3.0 as did Syria by 2.3 points.

"The results show that while customers feel they are in a better financial position, they are still reluctant to part with their money for high-end consumer items, which suggests that consumers are being cautious – perhaps until economic improvements look as though they are here to stay," said Joanna Longworth, Chief Marketing Officer, YouGov.

Although the UAE has seen the most significant drop since the base period of April 2007, it is also witnessed a significant recovery since the previous wave in May 2009. "Not only do people expect an improvement in their financial situation in the future but there is already a positive shift when measured against the previous wave in May 2009," said the survey.

Similarly, faith in the country's economy has also seen a positive jump and with even more positive future expectations. Confidence in business conditions as well as the job market also improved.

The survey showed that respondents felt certain features of their economic positions were unchanged from the previous year. More than a third of respondents, 34 per cent, felt that they were in the same financial position as last year, while the same number agreed that their country's economy was unchanged. Respondents are optimistic about the future. Almost half of respondents, 48 per cent, said they believe business conditions will be better and 40 per cent said they believe their country's economy will improve in a year's time.

Across the rest of the Middle East, consumer confidence levels showed a positive increase. Confidence in Kuwait rose the highest among the surveyed countries with an increase of 10 points, and as in the previous survey, Kuwait and the UAE retain the two top spots in terms of improved confidence.

While Qatar followed with a strong increase of 9.0 points, the picture around the rest of the Gulf varied, with an increase of 5.1 points in Bahrain and 3.4 in Saudi Arabia.

Despite being one of the only countries in the Middle East to record a consistent improvement in consumer confidence over the past year, Lebanon in this survey was the only country to deteriorate, moving down the index by 0.7 points.

By comparison, Syria showed a significant improvement of 5.6 points. In North Africa, Egypt and Morocco topped the table in terms of improved consumer confidence, moving up 7.7 and 6.7 points respectively, contrasted with a move up the index of just 2.6 points in Algeria.

"While we are not seeing massive jumps up the index, the data shows that there are steady improvements, which reflects what is being reported and felt in economies around the region – namely that things are starting to pick up," said Amer Zureikat, Bayt.com's Regional Manager.

"Improvements in the index have been seen in countries in the Middle East for around six months now, so the real test as to whether consumer confidence is being sustained and improved as a result of the easing of the recession, will become evident over the next year or so," he said.

Optimism for the future was found to reign supreme with many of the region's respondents. Almost half of respondents, 46 per cent, said their personal financial position would change for the better in a year's time, and just eight per cent said that it would be worse. The UAE's respondents were only slightly below the average, with 45 per cent stating their position would be better. Most optimistic among those surveyed were respondents in Bahrain: 52 per cent said their finances would be better after a year.

Respondents are positive that their country's economy would improve in a year's time; 40 per cent said that it will be better, compared to just 19 per cent of those that said it would become worse.

While Kuwait topped the table – 51 per cent of respondents said their economy will be better – the UAE was also near the top: 49 per cent said things will be better.

Only 14 per cent said that things would become worse.

Respondents in Saudi Arabia and Qatar were similarly positive, 47 per cent and 46 per cent expected things to be better after a year. As in the previous survey, the UAE was the country that improved the most, moving up the Consumer Expectations Index (CEI) by 8.6 points, closely followed by Qatar, which moved up by 8.3 points.

Kuwait also followed suit, with an improvement of 7.0 points. Bahrain and Saudi Arabia showed the lowest improvements among the GCC countries, moving up 5.1 and 3.1 points respectively. In North Africa and Levant, Egypt improved the most in terms of consumer expectations, moving up by 6.1 index points, followed by Syria at 5.4 points and Algeria at 4.0.


Job market

The UAE showed a positive improvement in the Employee Confidence Index (ECI) moving up by 6.0 points, following from the improvement of 8.1 index points in the previous wave. ECI is a general measure of how people feel about the local job market and highlights their current attitudes towards availability of jobs and salary satisfaction.

Showing the most improvements were Qatar and Syria, which moved up by 10.6 and 9.6 points respectively.

The picture around the Gulf was also positive: Kuwait and Bahrain moved up by 6.8 and 6.1 index points, while Saudi Arabia showed a less remarkable increase of 2.1 points. As in the previous wave, Lebanon saw a drop in employee confidence, this time by a higher 2.0 index points, while Algeria moved down by 1.3 points.

The rest of the surveyed countries all showed improvements.

"In general, the employee confidence index shows that employees feel that their respective labor markets are picking up, with the exception of Lebanon and Algeria. This suggests that recessionary pressures are still being played out in those economies," said Longworth.

"This data, coupled with ongoing news reports of the global economic downturn coming to an end, suggest that conditions are already better for employees," she said.

Following on from improvements in the previous wave, a greater proportion of respondents believe that more jobs will be available in a year's time.

Just 28 per cent of all respondents said they felt that job availability will be worse compared to 33 per cent in the last wave, while 30 per cent of respondents said conditions would be better.

WHAT DO YOU THINK? has your financial condition improved from last year?

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