Sberbank CIB News

Sberbank CIB Ivanov Consumer Confidence Tracker Update


The unemployment rate among the respondents dropped to 10.9%, wage growth rose to 6.5%

Sberbank Investment Research today publishes its twentieth survey of the pan-Russian consumer, the Sberbank CIB Ivanov Consumer Confidence Tracker, which monitors consumer spending, savings and confidence trends across the country.

This proprietary publication includes a headline consumer confidence index and also provides a set of leading indicators for the most important trends in the country’s rapidly expanding consumer sectors (retail, banking, telecoms, media, IT, real estate and transportation).

The survey is undertaken by market research agency Cint on behalf of Sberbank CIB and is now conducted quarterly under a methodology that closely mirrors that of the State Statistics Service’s quarterly survey and EU confidence assessments. However, our survey is expanded to encompass a wider set of questions relevant to Russia’s middle-income consumers. The survey sample is 2,300 people aged 18 to 65 and living in 164 cities with a population of over 100,000 inhabitants. The tracking error is below 2%.

Consumer confidence, which had been strengthening since 4Q15, weakened to -15% in 2Q17 from -10% in 1Q17. As a result, the index returned to the average level seen in 2H16.

Consumer confidence index

Source: Cint, Sberbank CIB Investment Research

We give the main findings of our survey below.

  • The unemployment rate among our respondents dropped from 12.1% in 1Q17 to 10.9% in 2Q17. Underemployment (the share of those employed part-time but willing to work full-time) rose to 9.2% from 9.0% in 1Q17 and 8.9% a year ago. At the same time, more respondents mentioned that their companies were hiring new people (9.2% in 2Q17 versus 8.3% in 1Q17). The share of those who reported layoffs at their company or workforce attrition dropped to an all-time low of 40.7%, versus 44.8% in 1Q17 and 50.6% a year ago. As a result, the net hiring index climbed to -31.5% from -36.5% in 1Q17 and -43.2% in 2Q16.
  • Our survey indicates that wage growth rose to 6.5% y-o-y in 2Q17. The current figure is still well below the 8-9% that we expect to see in the official statistics. 27% of Ivanovs got a raise or wage indexation of 6.2% YTD, suggesting 1.7% average increase for the whole sample. If wages are increased, only 20% of this will be allocated toward food (compared with the 39% of income currently spent on food), 14% will be directed toward clothing and household goods (currently 16%) and 12% will be saved (compared with just 7% currently). The savings ratio tumbled from a lowly 7.0% in 1Q17 to a record low 6.6% in 2Q17 (versus the pre-crisis 2014 average of 9.0%).
  • A Q-o-Q deterioration was seen across all of the index’s individual components, but most clearly in perception of country wealth (both forward and backward looking). We attribute this to the recent ruble depreciation. Accordingly, the share of respondents who worried about economic growth increased to 35% in 2Q17. On a positive note, personal wealth index remained well above 2H16 levels.
  • In terms of the population’s concerns, the overall picture did not change much last quarter. Inflation was again cited as a concern by 47% of respondents and remained in third place. Corruption remained the major concern (59%). Unemployment was the second biggest worry, 55% of respondents citing it as a serious concern (flat Q-o-Q). Despite the significantly increased value of net hiring index (-32% in 2Q17 versus -37% in 1Q17), it came amid still the high level of unemployment. Finally, only 17% of respondents were troubled by the ruble exchange rate, down 1 pp from the previous survey.
  • In new reality people try to save on food in different ways: shop in cheaper stores with lower prices (68%), use promo offers more often (62%), buy less expensive food (62%). The share of price-sensitive respondents lifted from 73% in 1Q17 to 75% last quarter. Similarly, the proportion of Ivanovs who have been trading down increased by 1 pp to 71% last quarter. The share of customers coming to the store solely to buy promo items slightly increased from 45% in 1Q17 to 48% in 2Q17. On the other hand, the share of Ivanovs trying to save on non-food items declined y-o-y, though it remained rather elevated. The share of customers trying to save on eating out fell from 73% in 2Q16 to 69% in 2Q17, while 63% tried to save on vacations, compared with 67% in 1Q17 and 60% in 2Q16.