Malaysia: Consumers worried about income, job security, says MIER survey

• Feb 04, 2021

KUALA LUMPUR: Consumers are increasingly worried about their income and job security as the Covid-19 pandemic continues, further straining their confidence, according to a survey by the Malaysian Institute of Economic Research (MIER).

The MIER’s Consumer Sentiments Index (CSI) for 4Q survey revealed household finances at year-end were the weakest in nine months; lost wealth hit those in the low income, rural areas and south the hardest; while an all-time low of only 8% saw an increase in job opportunities,

In the report issued on Thursday, it said the CSI in 4Q of 2020, at 85.2, was down by 6.3 points on the quarter, the lowest reading in three quarters.

All components that comprised the CSI registering lower in 4Q, especially current finances.

“Not only is this the lowest reading in three quarters, its persistent stay below the 100-point threshold level of confidence indicates that consumers are losing faith in the economy and their well-being going forward, ” it said.

MIER’s survey pointed out the on-going pandemic has likely “zapped” consumers’ confidence and cut into their buying power, amid challenging labour market conditions and they are planning to rein in their spending in the coming months.

“So, if one wants to know how consumers really feel about their financial future, then look at their willingness to commit to a long-term mortgage – housing and car demand are losing momentum. By that gauge, consumers are clearly more cautious, and worried, this time around, ” it said.

The survey found out household finances at year-end were the weakest in nine months. While 47% did not see any change in their incomes in 4Q20, those who enjoyed better finances recently fell to 11% per cent from 16% per cent a quarter ago.

“Respondents who reported being worse-off than before also rose to a three quarter high of 42%, even surpassing the previous year’s 40%, ” it said.

“Positive responses this quarter were lower than last quarter in all categories of income, location and region, except the north. The eastern region lost the most votes this time around, with 16% reporting higher incomes, as against 28% last quarter.

“Lost wealth hit those in the low income, rural areas and south the hardest, with negative replies of 44% to 53% this quarter, ” it said.

In terms of finances in the coming months, the survey found that while most (41%) of the respondents do not foresee any change in their finances in the near term, more (21%) of them than 3Q20 (18%) are expecting theirs to worsen soon.

The employment outlook was not upbeat too as only a handful of them were positive about the employment situation in 4Q20.

An all-time low of only 8% saw an increase in job opportunities in 4Q20, while those who thought jobs were hard to come by surged to 67%, the highest on record since the inception of this survey in 1988.

Categorically, those who saw more jobs up for grabs in 4Q20 were largely from the high-income group, urban areas and the east, with 10%, 8% and 11% per cent saying so, respectively.

Pessimism is higher amongst those in the low- and middle-income brackets, urban and rural areas, as well as in the south, with proportions of negative responses totaling between 66% and 75% in 4Q20.

“The job outlook for early 2021 is generally lacklustre. Most respondents are of the opinion that either the availability of jobs will decrease further or remain unchanged in the months ahead, with 36 and 24 per cent responses, respectively, while 23 per cent perceived favourably, ” it said.

The survey showed the high-income, urban, northern and eastern households were the most optimistic about the jobs outlook, with votes totaling 24%-29%.

Again, the low-income, urban, rural and south categories were downbeat about the job prospects.

The report showed lack of job security impacted consumers’ willingness to shop. The combination of income and job worries was a strain on consumer confidence.

Spending plans are taking a breather in the coming months and hence the reluctance to take on the huge financial commitment of paying off a mortgage like house and car for now.

“It is likely that low interest rates no longer spur their interest, as jobs have become a bigger worry now than before. Attesting to this is the latest results which show that only 13% may turn house hunters soon, down from 15% a quarter ago, ” it said.

However, the situation was not so dire for consumers in the high-income group, urban areas and east as the showed the most interest here.

Meanwhile, the MIER survey showed an overall dip in plans to buy cars/vehicles with 10% disclosed having these plans for the coming months, down from 11% in 3Q20 and 12% in 4Q19.

Again, the middle income, rural areas and north were more enthusiastic about buying cars but the preference for new cars was moderating.

There was a decline in the respondents seeking to buy new cars, according to the survey. Some 56% of the respondents are going for new cars, down from 60% in 3Q 2020 and 61% in 4Q19.

“Interest in new cars is more prevalent among respondents in the urban areas, central region and high-income category.

“Those setting their sights on used ones are more likely to be from the north, east, middle-income group and rural areas. The cool homebuilding plans are also translated into equally cool plans for furniture and other consumer durables covered in this survey.

“Compared to 3Q20, fewer respondents, like houses and cars, have also disclosed their plans to shop for furniture in the next few months. The proportions shopping for television, washing machines, refrigerators, personal computers and cookers soon have remained the same as the prior quarter’s 7%, 7%, 7%, 9% and 7% respectively, ” it said.

The MIER survey showed less enthusiasm among consumers to buy, and this confidence would depend mostly on their after-tax income growth.

“Until the economy kicks into better shape, salaries and hirings may not turn a corner anytime soon. The slow pace of wages has, so far, helped to plough under inflation, enabling the economy to evade the weedy creep of rising prices.

“But with no end to the Covid-19 pandemic in sight anytime soon, the overall inflation outlook may not be as benign as the price indexes suggest. This is because the pandemic, if prolonged, could accelerate inflation and crimp growth.

“For consumers, job and income growth clearly leaves much to be desired for now which is why they are going slow on their spending going forward, especially in light of the continuing challenges posed by the Covid-19 pandemic.

“Moving forward, much will depend on the domestic economy, the stock market and the global economy in the near term. And consumers will, no doubt, be watching these with much vigilance, ” it said.

Source: https://www.thestar.com.my/business/business-news/2021/02/04/consumers-worried-about-income-job-security-says-mier-survey