The Consumer Confidence Index (CCI) climbed from 71.6 points in June to 72.5 last month. A level below 100, however, still reflects weak consumer sentiment.

Higher confidence is good news for the retail industry, as consumers believe it is the best time in seven months to buy a new house or car or to travel, and for small and medium-sized enterprises to invest and expand their businesses.

“Higher crop prices, lower fuel prices, and a better outlook for the government’s investment and economic stimulus packages have driven consumer confidence. However, the upcoming referendum is a concern for future consumer confidence,” Thanavath Phonvichai, director of the UTCC’s Economic and Business Forecasting Centre, said yesterday.

Encouragement

He said that if the majority voted in favour of the draft constitution in this Sunday’s referendum, it should encourage people as it will ensure stabilised politics.

He added that if the referendum passes, it would increase Thais’ and foreigners’ confidence that economic growth will be stable and the military-led regime will proceed with its plan to hold an election next year. The economy will grow more strongly, while investment will increase.

However, if the majority of voters disagree with the draft constitution, Thai and foreign investors may go into “wait and see” mode. New investment or business expansion plans could be delayed as people wait for the regime to set up a new constitution drafting committee.

Thanavath said the improvement in consumer confidence last month indicated that the CCI had bottomed out and should grow in a U shape during the following months. The consumer confidence should increase strongly in the remaining months, in particular in the first quarter this year.

Based on 2,247 responses to its survey last month, the centre found that other indices reflecting consumer confidence also increased for the first time this year, including future incomes from 87.6 points in June to 88.7 points in July, and future employment opportunities from 66.5 to 67.4.

Confidence in political stability improved from 93.1 to 95.8, the second consecutive monthly increase.

Meanwhile, a poll by the UTCC indicated that spending during the long Mother’s Day weekend would increase by 3.8 per cent to Bt12.71 billion, the largest expansion in four years.

The Consumer Confidence Index has been sliding for five straight months, and inched down from 72.7 points in April to 72.6 last month. A level below 100 reflects weak consumer sentiment.

“The small decline in consumer confidence is a good sign, reflecting that consumers are not highly concerned about negative factors affecting the economy and expect it to grow steadily, resulting in higher consumer confidence in the near future,” Thanavath Phonvichai, director of the university’s Economic and Business Forecasting Centre, said yesterday.

The UTCC has retained its forecast that gross domestic product will grow by 2.5-3.5 per cent this year.

Thanavath said key factors shoring up confidence would be the government’s infrastructure investment projects and rising crop prices, mainly of rubber, benefiting local economies.

Last month, the negative factors hitting confidence were weakening export growth, rising fuel prices, concerns about uncertain global economic growth, and the impact of drought on economic expansion. Based on a survey of 2,248 respondents, the confidence index for the future rose from 88.5 in April to 89 in May.

Continued low confidence is bad news for the retail industry, as consumers believe it is the worst time in four months to buy a new house and the worst in six months to buy a new car.

Last month, people also did not want to invest in or start up a business or even go anywhere, as confidence in those activities was at its lowest level in six and a half years.

The UTCC found the index on future income outlook increased slightly from 88.5 points in April to 89 in May, but the index on future employment opportunity decreased from 68 to 67.7.

Meanwhile, a separate survey by the UTCC found that spending during the upcoming Euro 2016 soccer tournament would decrease by 19.6 per cent from Euro 2014 to Bt76.54 billion because of the sluggish economy and fewer purchases of electrical appliances.

Wachara Kuntaweethep, assistant director of the Economic and Business Forecasting Centre, said the spending would be mainly on gambling, estimated at nearly Bt58 billion, and the rest for food and partying (Bt14.8 billion), for electrical appliances and satellite television fees (Bt2.38 billion), and other expenses (Bt1.45 billion).

He said that as most of the spending during the soccer tournament would be on betting, this entailed high risk as it would cause more indebtedness to loan sharks and crime.