Experts discuss Consumer Confidence Index outlook for 2010

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Q: There is the unemployment issue as well because there has been some uptick in terms of unemployment expectations but job securities have done okay. Is that one bit of positive factor in that entire reading what are you reading in this entire picture because the unemployment has been a bit of a niggling point despite there being a bit of a recovery in the past two-three months?

Luce: When we look at employment or unemployment in India we look at three factors. We ask consumers about their overall perceptions of employment in India, the personal job security and the ease of means of creating an alternative of employment should they loose their job.

The overall employment index made up of those three variables has gone down in a similar manner as the consumer confidence index. In other words it was bottoming out for several months. We saw a couple of upticks. There was then a 4.5% decline in this case. Of those three variables the one which is driving or weighing down the most on employment confidence is the perception of employment overall in the nation in India. Job security or feeling of your own job security have increased in India over this past month. We have seen an increase in optimism by people who are able to keep their jobs they currently have.

Q: You have a clear exposure to the financial market and the way the globe is functioning. India has been touted to be slightly insulated from the wild swings you have seen in 2008 to this entire recovery. For your sector in particular how have you seen trends, emotions and even confidence in terms of hiring the squeeze that really happened then the major lay-offs scene that we saw in the first half of 2009 and now a bit of resurgence as well?

Varma: Definitely. India is insulted to the rest of the world. We did not have the wild swings in employment numbers even within the financial services sector. There was some pain in the first quarter of 2009 and last quarter of 2008 when the global recession or the global crisis was at its worst. Looking into 2010 and even from the last six months of 2009, we have quite a bullish view going into 2010. Every single piece of anecdotal evidence that we have seen within our institute, organization and clients that we talk to hiring is on an uptick and employment should be going up. I am a little surprised by the findings of this index which somewhat paints a slightly different picture to everything that we see in and all pieces of anecdotal evidence that we have seen over the last six to eight months.

Q: We saw it at the auto expo the amount of luxury car manufacturers that came in. December was such a great season in terms of holiday sales. What is your sense going forward in terms of this entire luxury area and with liquidity coming into the market it sort of repaired the company balance sheet and its helped the corporate India a fair bit is there some bit of a correlation or a trickle down effect that you can draw from possible an improvement in sentiment or corporate earnings, eventual employment and how consumer confidence may pan out in the next year?

Varma: There is definitely a trickle down effect. The question is transmission mechanism and how long does it take to trickle down and corporate earnings season. When you first have seen first quarter 2010 earnings, we expect them to be very strong. Every thing that you mentioned, car sales, industrial products, all did point to strengthening of demand and strengthening of economy will trickle down. The question is that how long will it take? How efficient is the transmission mechanism for that to happen? So we are quite optimistic and bullish for 2010.