Urban India Consumer Outlook Index improves on majority vote

13 out of 18 cities in ZyFin's pan-India survey report improvement in sentiment

ZyFin Research has announced the Consumer Outlook Index for May 2014. The index, which is a barometer of consumer confidence, reflects current and future spending plans, employment and inflation outlook of urban Indian consumers. It has registered a score of 42.0 for May 2014, as compared to 40.6 for the previous month. A score above 50 reflects optimism while below 50 is an indication of pessimism. The top five cities with the highest scores this month were Mumbai, Hyderabad, Mangalore, Chennai and Bhubaneswar.

The index is based on a monthly survey of 4,000 consumers across 18 cities categorized into metros, Tier I and Tier II. With private spending accounting for over 55% of India's real GDP, gauging consumer sentiment plays an important role in identifying turning points ahead of time.

Key Highlights of the ZyFin Consumer Outlook Index for May 2014:

The ZyFin Consumer Outlook Index of India (COI) improved to 42.0 in May 2014, from 40.6 in the previous month. This increase is based on a sizeable recovery in consumers' willingness to spend in the coming months. This can be an early indication of improving sentiments, linked to a strong government infused with all the parliamentary muscle required to initiate and push through reforms. However, consumers continue to observe a stagnant macro-economy, reporting negligible improvements in employment and inflation sentiment. Until concrete policy reforms show results, consumers are likely to remain unmoved on these fundamental macro issues.

Among the COI components, the Inflation Sentiment Index, the largest inflationary expectations survey globally, moved up to 25.6 in May 2014 after two months at 25.1, reflecting a moderate improvement in sentiment towards inflationary conditions.

The Spending Sentiment Index improved for the first time since December 2013, to 28.1 in the current month from its lowest-ever level of 25.9 in the last month.

Another key component, the Employment Sentiment Index extended its stay within optimistic territory to five months, but remains almost unchanged. The index improved marginally, to 51.7 in May 2014, from 51.6 in the previous month.

Giving his views on the ZyFin Consumer Outlook Index numbers for the month of May, Mr. Debopam Chaudhuri, Chief Economist, ZyFin Research, said, With the Reserve Bank Of India signaling a softer interest rate regime, we expect consumers' willingness to spend to improve over the next three to four months. This would ensure the much-needed revival in the auto and real estate sectors, which are key to providing a boost to the sagging economy where 55% of GDP is composed of private spending.

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