Consumer Confidence Hits 7-Year High in July
By Lee Hyo-sik
Staff Reporter
Consumer confidence has risen to its highest level in seven years on the back of upbeat data about the state of the Korean economy, the central bank said Monday.
Surging stock, real estate and other asset prices also helped consumers adopt a more optimistic economic outlook, which will likely bolster sluggish private spending in the coming days and encourage companies to expand investments and hire more workers.
In a survey of 2,184 local households in 56 major cities nationwide, the Bank of Korea (BOK) said the consumer survey index (CSI) ― a gauge of the overall public sentiment on the economic outlook and living conditions ― jumped to 109 in July from the previous month's 106, rising for the fourth consecutive month. The July figure is also the highest since the third quarter of 2002 when it stood at 114.
An index of above 100 signals optimists outnumber pessimists.
"Consumer sentiment has improved significantly over the past few months on a set of encouraging indices. Industrial output has been rising on rapidly rebounding exports and the job market has shown signs of bottoming out. I think all these positive data have boosted consumer confidence in the economy," a BOK official said.
Asia's fourth largest economy expanded 2.3 percent in the second quarter of the year from three months ago, marking the fastest growth in more than five years, thanks to massive state stimulus measures and rising consumer spending fueled by tax cuts and other government incentives.
The official said soaring stock and real estate prices since March seem to have made people feel richer and more willing to spend on various goods and services, which will further shore up industrial activities, adding that consumer sentiment here will likely continue to head upward.
The index for economic conditions for the coming six months also climbed to 114 in July from 108 a month earlier, while the index measuring expectations of job opportunities rose to 91 from 89.
Consumers projected that property prices will continue to go up for the upcoming six months, with the CSI for real estate jumping to 106 from 102. But the index for stocks fell to 102 from 104, meaning more consumers have turned bearish about stock market prospects as a result of the ongoing steep rallies.