Survey: Malaysian consumers moving away from crisis-mode response amid improved outlook; fewer plan to cut dining out first

KUALA LUMPUR, July 27 —  Malaysians in a survey are now less pessimistic about their household financial situation, when compared against March and April — which was shortly after the US-Iran conflict or crisis began.

Consumer research company Rakuten Insight, which has been tracking Malaysian consumer sentiment through an online survey called the Malaysia Cost Pressure Pulse (MCPP), said its latest survey showed Malaysian consumer sentiment recovering sharply in July, when compared to survey results in April.

“The share of Malaysians expecting their household financial situation to worsen over the next three months collapsed from 57.4 per cent to 39.8 per cent — a 17.6 percentage point swing, the single largest wave-on-wave movement recorded anywhere in the tracker to date,” it said.

In other words, fewer Malaysians in the survey now expect their household financial situation to become worse over the next three months.

This reflects an improved outlook among Malaysian consumers.

Rakuten Insight noted that this recovery in Malaysian consumer sentiment takes place “four months after the Strait of Hormuz crisis first rattled Malaysian households, and three weeks after a ceasefire between the United States and Iran brought oil prices back toward pre-crisis levels”.

The third and latest edition of the MCPP survey involved 1,003 Malaysians from July 13 to July 14, while the first and second editions or waves involved 1,042 (March 16 to 18) and 1,052 respondents (April 6 to 8).

Survey finds shift from ‘panic’ in April to ‘patience’ in July, and normalising spending behaviour 

In the same tracker, the share of Malaysian respondents whose first response to a sudden rise in expenses would be to cut discretionary spending fell from 53.5 per cent (April) to 44.7 per cent (July).

At the same time, two behaviours that those surveyed picked as their first response also showed recovery from the acute period of the US-Iran crisis: use savings (increased from 11 per cent in April to 13.5 per cent in July); delay a big purchase (increased from 8.8 per cent in April to 10.6 per cent in July).

”Malaysians are no longer reaching reflexively for the most defensive option available — a sign of more considered financial decision-making replacing crisis-mode reaction,” Rakuten Insight said when commenting on what the findings mean. 

When contacted, Rakuten Insight Malaysia’s commercial research lead Min Yao Kong explained that the MCPP measures consumers’ sentiment and intention, and that the data showed anxiety easing and behaviour normalising.

”People have room again to use slower, more considered tools, and that requires some confidence things will stabilise,” he told Malay Mail when commenting on fewer Malaysians opting for the cut-first reflex and more opting to delay buys and use savings.

When commenting on what has changed from April to July, Kong explained that delaying a purchase does not mean putting off buying forever, and that it is only a temporary call to hold off a bit longer because one thinks that their own financial situation would improve: “That only makes sense if you actually believe things are about to improve”.

As for why fewer respondents said they would choose delaying a big purchase in April as their first response as compared to March, Kong pointed out that more of them (57.4 per cent) had in April expected their household finances to worsen.

”If you don’t believe waiting gets you anywhere, delaying feels pointless, you either buy now or just drop the idea entirely,” he told Malay Mail, explaining this was why respondents in the April survey leaned toward cutting down on spending first instead of delaying big buys first.

Kong also gave examples of big purchases where people do have a choice on when to spend money, such as things that are aging but still working (a car that’s getting old but still runs fine; a phone that’s slowing down but still works; a renovation you want but don’t need).

On the increase in July of people opting to delay big buys as their first response, he suggested that this is because survey respondents feel that it is worth waiting again as they believe things would continue to improve.

”The ceasefire gave people an actual, recent reason to think conditions might keep improving, so holding off slightly longer finally felt worth it again, not because sentiment improved so much they should rush to buy, but because it improved just enough that waiting made sense again,” he said of the July figures.

Rakuten Insight noted that the recovery in Malaysian consumer sentiment showed up clearly in the survey respondents’ spending intentions, where there are now fewer that are planning to cut down on dining out, travel, and big-ticket items.

This is based on a survey question on 12 spending categories, where respondents were asked how they expected their spending to change in the next four weeks as compared to last month.

In other words, they were asked if they plan to spend more or spend less on these 12 categories, namely dining out and cafes; food deliveries; travel and holidays (domestic and international); big-ticket items (such as electronics, appliances, and furniture); apparel & footwear; entertainment and subscriptions; personal care and beauty; transportation; groceries and household essentials; utilities; healthcare and medicine; mobile and internet.

By comparing the figures for those who plan to spend more and those who plan to spend less on a category, Rakuten Insight highlighted that the net spending intention on dining out had improved from -22.1 per cent in April to -16.8 per cent in July, or by 5.3 points.

“Net intent to cut dining out improved by 5.3 points, the best single-wave recovery for any category in the tracker,” it said.

The net spending intention on travel improved by 4.9 points (-11.5 per cent in April, -6.6 per cent in July), and had similarly improved for big-ticket items by 3.8 points (-9.7 per cent in April, -5.9 per cent in July), according to Rakuten Insight’s figures.

On the changes in net spending intentions for travel and big-ticket purchases, Rakuten Insight said this suggests “some of the purchases delayed earlier in the year are beginning to re-enter consideration”.