KUALA LUMPUR – NOVEMBER 4, 2010 – Consumers in Malaysia are more optimistic than ever as the consumer confidence index hit reached a 3-year high of 103 in the third quarter of 2010, up 4 points from the previous quarter, according to the latest edition of Nielsen Global Consumer Confidence Index. With this latest index of 103, Malaysia now ranks 8th in the Asia Pacific region along with Hong Kong (103), and ahead of New Zealand (99), Taiwan (88), Vietnam (88), Korea (59) and Japan (52). Across 53 markets worldwide, Malaysia ranks 10th.

Globally, consumer confidence fell three points in September to an Index of 90 as consumers’ hopes for a full economic recovery this year fades in most parts of the world. Consumer confidence also declined in 19 of 53 global markets in the third quarter. In contrast, consumer confidence increased or remained constant in 10 markets in the Asia Pacific (India, Thailand, Australia, Philippines, Hong Kong, New Zealand, Korea, Singapore, Taiwan and Malaysia). Consumer Confidence Index levels above and below the baseline of 100 indicate degrees of optimism and pessimism.

“Malaysian consumers have many reasons to feel confident. Factors such as the buoyant stock market thanks to the pre-election rally as well as the Ringgit hitting a 13-year high in August have added to the optimism in the country. Compared to the rest of the world, Malaysians are a lot more positive about their future with three consecutive quarters of increased optimism in the country, and reflects consumers confidence on job prospects and the economy,” said Kow Kuan Hua, Managing Director of The Nielsen Company in Malaysia.

Highlights of Nielsen’s third quarter Consumer Confidence Index include:

Outlook on the economy remains positive

Along with the slight increase in consumer confidence in the third quarter, more Malaysian consumers (53%) feel that the country is not in an economic recession (compared to 54% and 44% in the second and first quarters respectively). Within Asia Pacific, Singapore has the largest proportion of consumers who think that their country is not in a recession (83%), compared to the regional average of 61 percent.

However, the percentage of consumers who believe Malaysia will be out of recession in the next 12 months was 25 percent, almost unchanged from the second quarter. This is consistent with the finding that the economy remained a top concern for consumers in Malaysia (12%), along with work/life balance. For 9 percent of Malaysian consumers, debt is a top concern.

Improved job prospects and personal finances

Malaysian consumers also feel more confident about local job prospects compared to the second quarter of 2010. 64 percent believe that their job prospects over the next 12 months are excellent or good, a 1-point and 7-point increase compared to the second and first quarters respectively. The optimism towards local job prospects is also reflected in other Southeast Asian countries – over 60 percent of consumers surveyed said their job prospects are good or excellent.

In another vote of optimism, 60 percent of Malaysian consumers believe that the state of their personal finances over the next 12 months will be good or excellent, up 1 point from the second quarter of 2010. The figure is also higher than the 56 percent average across the Asia Pacific.

More Malaysians continue to save

In the third quarter, 65 percent of Malaysians (up 1 point from the second quarter) put their spare cash into savings, the top use of spare cash among Malaysian consumers. After savings, the other 5 top uses of spare cash were: vacations (44%), paying off debts (37%), investing in shares/mutual funds (32%), and new clothes (27%).

Household expenditure likely to remain controlled going forward

While consumers are feeling more positive about their personal finances, only 34 percent of consumers in Malaysia believe the next 12 months ahead will be an excellent or good time to buy the things they want and need (up from 29% in the second quarter).

Malaysian consumers are also still showing caution when it comes to household expenditures. In the third quarter, 73 percent said they changed their spending habits to save on household expenses, compared to 78 percent in the second quarter. Across the Asia Pacific region, 61 percent of consumers indicated they have cut back on household expenditure in the third quarter, compared to 73 percent in the second quarter.

“While Malaysian consumers generally feel secure about their financial condition, lingering uncertainties about the economy, both locally and globally have influenced the way they look at spending. Saving on household expenses is something within their control, and they are exercising more discretion in this regard,” said Mr. Kow.

The top 5 household expenditure areas in which consumers in Malaysia are cutting back on include new clothes, out of home entertainment, technology products, groceries, utilities, and phone bills.

Once economic conditions improve, Malaysian consumers are likely to continue to save on household expenditures: 35 percent of consumers said they will continue to save on utility bills, 31 percent will spend less for new clothes, 29 percent will reduce out-of-home entertainment, 24 percent will use cheaper groceries brands and save on phone bills.

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