KUALA LUMPUR (July 19): The Malaysian Institute of Economic Research (MIER) Consumer Sentiments Index (CSI) has breached the 100-point optimism threshold to soar to 132.9 in 2Q18.

"The biggest increase stemmed from the expectations component, boosted by the recent change in the political landscape as well as the abolition of the goods and services tax," a survey by MIER found.

An all-time high of 39% of the respondents were hopeful that their income will improve in the second half of 2018, with a 14-year low of 6% responding negatively.

Consumers were also excited about the near-term labour market, said MIER. "A majority of 41% believed that more jobs will be available soon, the highest since 1Q13. The 9% who responded otherwise is also the lowest in almost 18 years."

Besides that, inflationary expectations were also revealed to be at an all-time low. "Only 24% of interviewees said they will be balking at higher prices soon, in sharp contrast to the 50% to 92% of responses obtained since the inception of this survey in 1998," said MIER.

The report concluded that a record high of 43% of the respondents were of the opinion that 2Q18 was a good time to buy or invest in major consumer durables.

However, it is unclear how far the buoyant sentiment is due to the current tax holiday Malaysians are enjoying, MIER executive director Prof Dr Zakariah Abdul Rashid said at the institute's 33rd national economic briefing today.

MIER cautioned that much will depend on the sales and services tax that will be implemented in September. The Finance Ministry on Monday (July 16) announced that goods will be levied a 10% tax and services a 6% tax.

"The resilience of economy will not be a sure thing until consumer spending is on firmer ground," it said.

Meanwhile, businesses also shared this upbeat outlook in the second quarter as MIER's business conditions index hit a three-year high at 116.3 points. This had been driven primarily by new domestic orders, higher investments and higher expected production and export sales in the next quarter.

"The environment shown by manufacturers is very encouraging," Zakariah said.

Both domestic and export orders inched up, production accelerated, investment spending rose and the rate of capacity utilisation increased over the quarter, MIER's survey showed.

The outlook is set to remaking positive in the coming months, with further expansion in export numbers expected, although local sales are expected to deteriorate and there will be upward pressure on prices in the next quarter, MIER said.