Survey: Consumer Sentiment Increasing

A survey shows that consumer sentiment is picking up, thanks to economic recovery expectations.

It appears that consumers are increasingly willing to spend more. The more income people earn, the more they are willing to increase their spending expenditures.

The Bank of Korea (BOK) conducted a survey to gather data for its Consumer Sentiment Index (CSI) for the fourth quarter (October to December) of 2,496 households in 30 cities across the nation, and published the results on December 23. They showed that the CSI, which represents consumers` future spending plans for the next six months, went up to 110 from 102 compared to the third quarter (July to September).

The higher the index, the more consumers will spend.

The spending expectation CSI seemed to rebound at 106 in the first quarter of 2005 after plunging to 97 in the fourth quarter of 2004 from 111 in the first quarter (January to March) of 2004, but the index fell again this year to 103 in the second quarter (April to June) and to 102 in the third quarter.

In terms of the spending expectation CSI for the fourth quarter, the index for all households with monthly incomes of more than 1 million won exceeds the base level of 100, but the households of less than 1 million won in monthly income hovered below the benchmark at 99. The index for the households of a monthly income of the 2 million won and 3 million won brackets stood at 114 and 116, respectively.

The pickup in consumer spending sentiments can be attributed to the optimistic outlook for economic recovery.

The index that measures the current economy rose to 82, 18 points up from the previous quarter.

Also, the consumer economic outlook CSI index measuring the future economy for the next six months significantly increased to 100 in the fourth quarter from 78 in the third quarter.

Kyung-Joon Chung news91@donga.com