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Consumer confidence in China regained some ground in September, buoyed by an improvement in consumers’ expectations about their future personal finances.
The Westpac MNI China Consumer Sentiment Indicator rose 3.3% to 115.2 in September from 111.5 in August, reaching its highest level since June. All sub-categories that make up the headline indicator improved between August and September, with the largest upgrades seen for Expected Personal Finances and Business Conditions in One Year.
Households’ current financial position improved somewhat in September, with another positive reading in the Investment Return Indicator possibly playing a part. Although expectations for future personal finances did not fully recovered from August’s plunge, there was a significant rebound in September – a tentative sign that households’ balance-sheets may be on the road to recovery.
Both long and short term measures of expected business conditions made solid gains in September, matching an increase in perceived current business conditions. Out of those who thought business conditions would improve, 32.1% cited supportive government policy as the main reason for optimism.
The Durable Buying Conditions Indicator, which measures the willingness of consumers to buy a large household item, rose for the second consecutive month, but the degree of improvement lagged behind other indicators in September.
Meanwhile, the improved outlook for household finances and business conditions was supported by an improvement in consumers’ expectations for the labour market. The Employment Outlook Indicator increased for the first time in three months, rebounding 8% to 99.5 in September.
In spite of the numerous measures implemented to tackle widespread real estate market imbalances, consumers’ attitudes towards housing showed further signs of improvement, with house price expectations rising over the month and house buying sentiment increasing to be back near the 100 ‘neutral’ level. This was accompanied by a rise in the proportion of respondents citing house purchase or down payment as the main reason for saving.
Commenting on the latest survey, Senior Economist of MNI Indicators Andy Wu said, “The September data is encouraging and shows sentiment has not moved on to a clearly negative trend. More significantly, our survey results hint at some resilience in sentiment which might suggest spending may not be quite as weak as feared. While the latest uptick in confidence is a source for optimism, we caution against placing too much emphasis on one month’s result.”
Westpac Senior Economist Matthew Hassan said, “The rebound in confidence is clearly a welcome development, particularly after the sharp slide over the previous three months. Some of this weakness has been due to severe weather events. However, even with a recovery sentiment is still at a low level overall and yet to establish a convincing recovery. The September rise is a step in the right direction and the improvement in labour market expectations is an important positive but much of the detail, around spending and saving behaviour in particular, points to more lacklustre growth for consumer sectors near term.”
