Consumer confidence stayed at high levels in the second quarter of 2005, driven by a rise in employment and expectations of higher wages, a survey released on Tuesday has found.

The survey by First National Bank and the University of Stellenbosch Bureau for Economic Research found that confidence was at 17 points, slightly down from a record of 19 point for the first quarter.

Consumer confidence was at four points in the last quarter of 2004.

"A rise in employment, especially in the building and retail sectors, and possibly expectations of salary and wage increases lifted consumers' confidence about an improvement in household finances," First National Bank's chief economist, Cees Bruggemans, told journalists in Johannesburg.

"The fact that consumer confidence stayed put at such a high level during the second quarter supports the notion that consumer confidence is now very high."

He said however, that the more than one rand rise in the petrol price between February and May most likely prevented confidence about the improvement in household finances from increasing further.

In the survey people were asked how they saw the economic position of South Africa in 12 months' time, how households saw their financial position in 12 months and whether now was a good time to buy durable goods or not.

Bruggemans said that more people than ever thought that now was a good time to buy durable goods.

"The Reserve Bank's surprise interest rate cut in April is probably not the only cause of the dramatic rise in approval of the present time to buy durable goods," Bruggemans said.

"Expectations that higher price increases will follow on the rand's fall from R6 to the dollar to the R6.70 level most likely convince more consumers that the present is the right time to buy durable goods."

People being able to afford more durable goods reflected the reality of South Africa today, Bruggemans said.

"In the past people were poorer. Now more and more people have access to durable goods," he said.

He said black consumer confidence was at very high levels, with Sotho speakers the most confident group in the country, followed by English speakers, Nguni speakers and Afrikaans speakers.

Bruggemans said the high confidence was underpinned by strong growth in retail sales, new vehicle sales and residential building activity in the second quarter of 2004.

He said people were not only parting with their money more easily, but they were also incurring debt.

"Last year mortgage advances increased strongly as many first time buyers entered the housing market and present owners upgraded to more upmarket houses or renovated their current ones."

Sapa

SA economy South Africa is the economic powerhouse of Africa, with a gross domestic product four times that of its southern African neighbours and comprising 25% of the entire continent's GDP.

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