Upbeat consumer sentiment, while business sentiment remain stagnant says MIER

KUALA LUMPUR: Malaysian Institute of Economic Research (MIER) reported an improvement in its Consumer Sentiment Index (CSI) with 93 points for the second quarter of the year (2Q19) from 85.6 points recorded in the previous quarter.

According to MIER, the CSI score was bolstered by consumers’ assessment of their current financial situation, particularly their income and employment expectation in the near future.

“With job growth and household finances looking up but conservatively for the second half of the year, consumers need to exercise prudence amid the rising cost of living as buying can only depend on future income gains,” it said.

The institute highlighted that in the months ahead, household demand will proceed cautiously, particularly for interest sensitive and big ticket items such as houses and cars, while those that are planning such purchases are buoyed by interest rate cuts to consider making this long-term commitment.

Meanwhile, MIER’s Business Sentiment Index (BSI) for 2Q19 fell marginally to 94.2 points from 94.3 points in 1Q19. MIER noted that the CSI and BSI were well below the 100 points threshold, indicating optimism in the sector.

MIER said its BSI survey results indicate that businesses are not optimistic about their local sales performance in the next three months.

“Of the eight components, current and expected production, domestic and external orders increased slightly while current sales, capital investment, capacity utilisation and expected export sales came in weaker,” the institute said.

It said that Malaysian manufacturers are not putting high expectations in their business activities due to the global economic tensions and uncertainties.

“Overall, business confidence appears somewhat lower and almost flat in the second quarter,” it said, adding that the BSI suffered a loss of 22.1 points on an annual basis.

“This trend of an almost stagnating index is expected to continue into the third quarter of 2019. Components such as expected export sales are expected to decline while expected production will likely increase slightly,” it added.

MIER has also revised its gross domestic product (GDP) forecast for Malaysia this year to 4.6% from 4.5% previously, due to changes in its forecast model.

“Despite the revision, we are not optimistic due to global headwinds and weak sentiments,” said its chairman Tan Sri Kamal Salih (pix).

However, MIER associate fellow Dr Jamal Othman said that the US-China trade war may not necessarily result in GDP and welfare loss to Malaysia.

“Malaysia is poised to gain in both welfare and GDP albeit very marginally. There will be improvements in terms of trade, resource allocative efficiency and accumulation of capital stock,” said Jamal.

He surmised that export of some Malaysian goods may rise such as manufacturing, meat products, palm oil and others however, overall Malaysian imports may see larger increases leading to declining trade balance.

source https://www.thesundaily.my/business/upbeat-consumer-sentiment-while-business-sentiment-remain-stagnant-says-mier-HC1172768