● Private consumption index (PCI) fell to its record-low in April (-15.1% YoY; Mar: -2.7%)

- Reflective of tightened COVID-19 lockdown measures, worsening labour market conditions and a record-low consumer confidence (47.2; Mar: 50.3).

● By segment, the deterioration was broad-based, led by withered spending on durables and non-durables

- Durables (-37.5%; Mar: -22.0%): deeper drop, with more consumers halting purchases of big-ticket items as the worsened COVID-19 situation in April further heightened the risk of income instability.

- Non-durables (-11.7%; Mar: 1.2%): first contraction in four months, as spending on necessities were curbed by restricted retail operations and a nationwide curfew implemented under the emergency decree.

● Private investment index (PII) remained in contraction, albeit at the softest pace in three months (-6.1% YoY; Mar: -8.7%)

- Business sentiment continued to decrease to a fresh record low (32.6; Mar: 42.6) on hampered domestic and external demand.

● By segment, the smaller drop wasdue to a low base from last year andsome improvement ininvestment in the construction sector

- Construction material sales (17.0%; Mar: -1.0%), construction area permitted (1.1%; Mar: -1.8%): charted a positive turnaround, in line with the expansion in capital expenditures from the central government and state enterprises, following the signing of the delayed budget at end-February.

● Private sector expenditureto remainrestrained as a repercussion of the COVID-19 pandemic and the containment measures

- The ongoing pandemic has weighed on external demand and resulted in cautious spending habit amongst households and businesses domestically. This is expected to prevail throughout the year, though a gradual recovery in sentiment may take place following the 4-phased economic reopening which began in May.

- The BoT may pause on further easing at the next MPC meeting in June, as it signalled its preference to monitor the effectiveness of the deployed measures and owing to the positive COVID-19 development.

Source: Kenanga Research - 1 Jun 2020