The consumer sentiment index suggests that people in general are quite optimistic. In fact, they have not been more optimistic since January 2016.
The Index of Consumer Sentiment increased from 106.5 as of the week ended November 27 to 106.9 as of the week ended December 4. Sentiment has improved substantially in the third and fourth week after the announcement of demonetisation. The index was a shade below 99 in the first two weeks. This shot up to over 106 in the third week and stayed there in the fourth.
Households have expectations of a much better future than their assessment of their own progress in the recent past. While there is some disappointment with the recent past, there is hope.
Sentiment remained strongly positive in the week ended December 4, in spite of an increase in the unemployment rate. This increased from a recent low of 4.7 per cent in the preceding week to 6.1 per cent. Unemployment rose substantially in rural India, from 3.9 per cent to 6.2 per cent. The rise in unemployment in rural India is a bit odd because this is the peak sowing season and sowing has been higher than in the past.
Payday continues into the current week, as many workers get their salaries around the 7th of every month and still others around the 10th. We will continue to remain short on cash. But, it seems that it is unlikely that consumer sentiment will change from their current optimism anytime soon. The English poet, Alexander Pope’s words seem apt in these times – “Hope springs eternal in the human breast”.
SENTIMENT CONTINUES TO BE HIGH...
...DESPITE UNEMPLOYMENT RISING
Business Standard brings you CMIE’s Consumer Sentiments Index and Unemployment Rate, the only weekly estimates of such data. The sample size is bigger than that surveyed by the National Sample Survey Organisation. To read earlier reports on the weekly numbers, click on the dates:
November 21, November 28
Consumer sentiment indices and unemployment rate are generated from CMIE's Consumer Pyramids survey machinery. The weekly estimates are based on a sample size of about 6,500 households and about 17,000 individuals who are more than 14 years of age. The sample changes every week but repeats after 16 weeks with a scheduled replenishment and enhancement every year. The overall sample size run over a wave of 16 weeks is 158,624 households. The sample design is of multi-stratrification to select primary sampling units and simple random selection of the ultimate sampling units, which are the households.
The Consumer Sentiment index is based on responses to five questions on the lines of the Surveys of Consumers conducted by University of Michigan in the US. The five questions seek a household's views on its well-being compared to a year earlier, its expectation of its well-being a year later, its view regarding the economic conditions in the coming one year, its view regarding the general trend of the economy over the next five years, and finally its view whether this is a good time to buy consumer durables.
The unemployment rate is computed on a current daily basis. A person is considered unemployed if she states that she is unemployed, is willing to work and is actively looking for a job. Labour force is the sum of all unemployed and employed persons above the age of 14 years. The unemployment rate is the ratio of the unemployed to the total labour force.
The creation of these indices and their public dissemination is supported by BSE. University of Michigan is a partner in the creation of the consumer sentiment indices.