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Byblos Bank Index sees slight pick up in consumer confidence in first half 2015; households' outlook improves

LEBANON.  Byblos Bank issued today, in cooperation with the Olayan School of Business at the American University of Beirut, the results of the Byblos Bank/AUB Consumer Confidence Index for the first half of 2015.

The results show that the Byblos Bank/AUB Consumer Confidence Index declined marginally in January and February, grew in March, regressed in April, and slightly improved in May and June 2015.

Further, the Index averaged 37.7 in the first quarter, nearly unchanged from the fourth quarter of 2014, and increased by a modest 4.3% to an average of 39.3 in the second quarter of 2015.

Despite the Index’s improvement in the second quarter of 2015, 79.7% of the surveyed Lebanese said that their financial situation is still “worse off” than it was six months earlier, while only 4.3% of citizens noted that their current situation is “better off” and 16 % said that it remained the same.

Mr. Nassib Ghobril, Chief Economist and Head of Group Economic Research & Analysis Department at Byblos Bank, indicated that political and security issues continue to have a disproportionate effect on consumer sentiment.

“Fears that clashes in January between Hezbollah and Israeli forces on the Southern border would escalate into a wider military confrontation, security breaches in Tripoli, and the standstill regarding the issue of the soldiers held by terrorist groups, negatively affected the confidence of Lebanese consumers during the first quarter of the year.”

He added: “The repeated failure of the Lebanese Parliament to elect a President and the resulting uncertain political outlook, along with widespread job insecurity due to the economic stagnation, held back the confidence of Lebanese consumers during the first and second quarters of 2015.”

In parallel, Mr. Ghobril considered that “the ongoing countrywide crackdown on suspected terrorists by security forces and the stable security conditions in the second quarter of the year; a functioning Cabinet amid the presidential vacuum and the parliamentary paralysis; the start of a formal dialogue between the Free Patriotic Movement and the Lebanese Forces Party; and the ongoing political dialogue between the Future Movement and Hezbollah supported consumer sentiment during the first half of the year.”

He added that “on the socio-economic level, the positive impact on households’ budgets of the 30% drop in local gasoline retail prices and of the sharp reduction in telecom tariffs, as well as the acceleration of the Ministry of Public Health’s food safety campaign, helped improve the outlook of consumers.”

Further, the Byblos Bank/AUB Expectations Index posted higher values than the Present Situation Index in each of the first six months of 2015, constituting the first instance since the first 7 months of 2011 where consumers have a more positive view about the future than about their present circumstances in six consecutive months.

However, Mr. Ghobril cautioned that “the results do not reflect a reversal of trends or a shift in households’ attitudes, as only 9.7% of Lebanese polled in the second quarter of the year expected that their financial conditions will improve in the coming six months, while 69.6% of them believed their financial situation will deteriorate, and 18.9% stated that their financial conditions will remain the same.”

The results of the Byblos Bank/AUB Consumer Confidence Index for the first and second quarters of 2015 remained consistent with the ongoing trend of low household confidence since the first quarter of 2012. Indeed, the results of the first quarter of 2015 were the 13th lowest since the Index’s inception in July 2007, while the second quarter posted the 14th lowest quarterly reading in 32 quarters. Further, the first-half results constituted the Index’s seventh-lowest level on a semi-annual basis.

The results of the Byblos Bank/AUB Consumer Confidence Index for the first  half of 2015 show that female consumers had a relatively higher level of confidence than their male counterparts; while consumers in the 21 to 29 year-old bracket posted a higher level of confidence than citizens in other age brackets during the covered period.

Also, households with an income of USD 2,500 or more per month continued to have a higher level of confidence than those earning less. Moreover, private sector employees had a higher level of confidence than housewives, the self-employed, public sector employees and the unemployed in the first half of 2015.

In addition, consumers in the North posted the highest confidence level across administrative districts, or mohafaza, in the first half of the year, followed by consumers in Mount Lebanon, the South, the Bekaa and Beirut. Further, Christian consumers had a higher level of confidence than those from other religious affiliations during the covered period, followed by Sunni, Shiite and Druze consumers.

About The Byblos Bank/AUB Consumer Confidence Index

The Byblos Bank/AUB Consumer Confidence Index is a measure of the sentiment and expectations of Lebanese consumers towards the economy and their own financial situation.

The Index is compiled, implemented and analyzed in line with international best practices and according to criteria from leading consumer confidence indices worldwide. It is composed of two sub-indices, the Byblos Bank/AUB Present Situation Index and the Byblos Bank/AUB Expectations Index.

The first sub-index covers the current economic and financial conditions of Lebanese consumers, and the second one addresses their outlook over the coming six months. In addition, the data segregates the Index based on age, gender, income, profession, administrative district, and religious affiliation.

The Index has been calculated on a monthly basis since July 2007, with January 2009 as its base month. It is based on a nationally representative survey of 1,200 face-to-face interviews with adult males and females living throughout Lebanon. The monthly field survey is conducted by Statistics Lebanon, a market research and opinion-polling firm.

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