Survey: 70% of Households Increased Spending in July

The main increase in spending was on electricity (among 44% of respondents) and food (37%), Millward Brown reported.

Israelis are starting to feel more confident about their economic future, it would seem: A survey commissioned by TheMarker from the research-based consultancy Millward Brown found that 70% of respondents increased their outlay on household expenditures in July compared with the previous three months.

The main increase in spending was on electricity (among 44% of respondents) and food (37%), Millward Brown reported.

Other areas that stood out in the survey were spending on cellular communications, in which 20% of households reported a increase, and going out to restaurants and other places of entertainment (19%).

Eighteen percent of Israeli households, according to the survey, spent more in July on clothing, while 17% spent more on vacations.

However, in at least some cases, the increase in spending may be more seasonal than emotional in origin.

Breaking down the patterns by age, Millward Brown found that adults aged 30 and over increased their spending more than younger adults did. However, that may be because the 30-plus group is more likely to have children, especially children on summer vacation, which is typically an expensive time. Among the group aged 30 and over, 75% said they spent more in July than in the previous three months, compared with 59% among adults aged 18 to 29.

Almost 40% of the group aged 18 to 29 said they did not increase their spending last month, compared with 25% among the 30-plus group.

A breakdown by income levels found that people earning more than the average wage increased their spending less than people earning the average wage or below.

Among the group earning less than the average wage, the greatest spending increase was on electricity, food, cellular communications and clothing. This may be because they had decreased their spending in these categories over the past year, which was characterized by a loss of consumer confidence.

In the group earning more than the average wage, the spending increases focused more on vacations, restaurants and other places of entertainment, along with activities for the children.

The reason for the upswing is evidently that people are regaining their confidence. Israel Oleinik, managing director and owner of the research company Shiluv - the local arm of Millward Brown - reported that 47% of the public are concerned about their financial condition over the next 12 months, down from 63% in March.

A breakdown by demographics shows that women tend to be more concerned than men about their economic future over the next 12 months - 54% compared with 39%.

The survey also found that worry mounts with age. For example, concern about their economic future exists among 41% of respondents aged 18 to 29, but the figure rises to 44% among people aged 30 to 49, and then to 55% among adults over age 50.

The return of confidence has also been evident in share prices, though as the feature on Page 12 notes, the stock market rally may prove ephemeral. Only time will tell.

But for the sake of proportion, one must note that while equities have risen powerfully this year, consumer confidence remains rocky. On the eve of Lehman Brothers' collapse in September 2008, the consumer confidence index was at 61.4. At the beginning of August 2009, the index was at 46.6, according to figures from Menorah Mivtachim.