The slowdown's over, the slide has begun
Purchases of consumer goods dropped in all categories in February
For the first time since the global economic meltdown began in 2007, the recession in Israel has become clear as day. Sales of food, beverages and products for personal and household hygiene fell in February compared with the corresponding month of 2008, according to the Barometer test by market research company StoreNext, commissioned by TheMarker.
For months, growth of these purchases slowed compared with a year earlier, but it was still growth. That's what "slowdown" means. Now the growth trend is gone and in its place we find falling sales in all categories.
In nominal terms, the drop in February sales from a year earlier is 1.2%. If you eliminate the increase in prices during the last year from the equation, the result is even more startling: 3.6%.
Every day brings news of fresh layoffs in all sectors. Asset prices have tanked and economic growth has vanished. Consumer confidence has cracked, so no category in retail has been spared. Sales of food fell for the first time in February, by 0.6% compared with February 2008. If we weed out the increase in prices during those 12 months - and the increase was significant - we find that the change is a stark 4%, an unambiguous sign of recession.
Drinks were not spared. The drop in nominal terms was 2.5% from a year earlier, but when the price hikes are neutralized, we find a drop of 3%.
Naturally the sector that suffered worst was personal and household hygiene products, which are relatively easier to economize on. Sales of personal hygiene products fell 3.5% in nominal terms. But in this category, if anything, prices eased in the last 12 months, so after adjusting for that, we find a decrease of about 3%.
Drop till you shop
In fact, the sales downtrend in all categories began in January this year.
When the Barometer test is applied to a longer period, from November 2008 to February 2009 compared with January-October 2008, we find a slight 0.3% drop in sales after adjusting for price increases. If we ignore this adjustment, we find a 4% increase in sales, which attests to the degree prices rose in that time.
In other words, Israelis spent 4% more money on buying in these categories during the latter part of the crisis, but we know - because food and drink prices increased sharply during that time - that they either bought fewer products, or bought cheaper ones.
For comparison, if we look at January-October 2008 compared with January-October 2007, we find a 14% increase in sales. After adjusting for price increases, we still find a 6% increase in sales.
When we look at the entire period since the economic crisis began its true meltdown, in November, one category stands out - personal hygiene products, where sales not only didn't fall, they increased slightly, after we adjust for price changes.
Naturally, shaken consumer confidence is hardly unique to Israel. But last Tuesday, the ABC news group reported a slight tick in American consumer confidence, which rose to minus-47 for the week ending March 15, from the previous week's reading of minus-48.
In another miniscule gain, the ABC survey showed 6% of respondents confident in the economic outlook, up from the previous week's 5%. Hardly a cry of confidence, but an uptick nonetheless.