KUALA LUMPUR: Consumers are filling up their shopping lists again after sitting out in the third quarter of this year (3Q14), ahead of any possible hike in interest rate and the impending implementation of the goods and services tax (GST) in April next year, said the Malaysian Institute of Economic Research (Mier).

“This, coupled with the bonus payouts and salary increments expected at year-end,” it said in its 3Q 2014 Consumer Sentiments results released on Tuesday.

The Mier’s Consumer Sentiments Index dropped below the threshold confidence point of 100 by 2.1 percentage points (ppts) to 98 in 3Q14, after rising by 3.3 ppts to 100.1 in 2Q14, indicating consumers are wary of their future and becoming more cautious about their sentiments.

According to the economic think tank, housing heads consumer’s shopping lists in 4Q14, with 20% of respondents saying they will go house-hunting soon.

This is followed by cars and furniture, with each having 15% of respondents who will be shopping for them soon.

“As building and labour costs will be subject to the GST, there is expectation that prices of residential properties would rise in tandem. This may have encouraged consumers, especially first-time homebuyers to start looking for a home of their own soon,” said Mier.

Mier said if housing kicks in, the lift to the economy will be broad as it is bound to spur growth, both directly through new construction and indirectly via purchases of home-related goods.

Nevertheless, in the coming months, most builders surveyed (54%) said they are unlikely to make any adjustment to their construction agenda, while 32% of them are more forward looking in this aspect and 14% looking into cutting back on theirs instead.

Mier said the outlook for the residential property sector remains moderate, as more builders surveyed are setting lower targets for the months ahead.

“But residential property prices for the coming months are expected to remain rather encouraging, with the proportion of respondents planning to hike prices soon falling substantially from the previous survey,” it said.

Mier also expects automotive sales to grow steadily moving towards the second half of 2014, underpinned by a supportive macroeconomic environment, attractive new launches and competitive pricing from festive promotions and rebates.

“The current sales figures seem to be on track to meet the forecast 2014 total industry volume of 675,000 units,” it said.

Meanwhile, manufacturers surveyed are expecting business conditions in 4Q14 will improve in terms of performance.

The Mier’s Business Condition Index  dropped by 17 ppts to 95.9 in 3Q14, well below the 100-point threshold, after improving by 9.8 ppts in 2Q14.

The drop in BCI was due to lower sales, drop in new domestic and exports orders, less vibrant manufacturing activities and piling up of stocks, it said.

This article first appeared in The Edge Financial Daily, on October 23, 2014.