Consumer sentiment eased slightly in September as confidence in the outlook for business deteriorated and consumers once again revised down their outlook for the job market.
The MNI India Consumer Indicator declined to 124.1 in September from 125.2 in August, the lowest level since May. In spite of the latest fall, sentiment has increased 2.3% since the start of the year and sits just above the series’ average of 123.8.
While consumers were slightly more optimistic about their household finances now and in the future, likely the result of seasonal Diwali bonuses, overall household finances have been generally weak since the start of the survey. The weakness has come in tandem with a sharp decline in respondents’ views about the job market. The Employment Outlook Indicator fell to new series low in September, adding a cautionary note to the general mood of Modi optimism.
Expectations for longer term business conditions fell to the lowest since October 2013, having risen strongly in recent months on the back of a “Modi” wave of optimism.
Demand for large household items was likely boosted by tax breaks included in the government’s budget as well as the upcoming festival season, with the Durable Conditions Indicator contributing positively to the MNI Consumer Indicator in September. The Durable Buying Conditions Indicator rose to the highest since May 2013 and was more than 17% above the level seen a year ago.
Consumers were optimistic about purchasing a car, mostly due to lower gas price expectations. The Car Purchase Sentiment Indicator rose by 10.3% to a series high of 86.6 in September from 78.5 in the previous month.
Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, “While consumer sentiment is up over the past year, it’s failed to receive the large Modi boost that companies in our business survey have exhibited. Respondents have yet to feel much tangible benefit and the continued deterioration in their employment outlook cautions about being too optimistic.”
“One clear positive was the further easing in the price indicators which suggests that the central bank’s hawkish policies are succeeding in lowering inflation expectations.”