Westpac MNI China Consumer Sentiment Indicator Edges Higher - Consumer Confidence Unfazed By Recent Stock Market Turmoil

The Westpac MNI China Consumer Sentiment Indicator increased in January, albeit marginally, led by a bounce-back in consumers’ optimism about their expected personal finances which offset a worsening in expectations for business conditions. Significant share price declines in early January had no material impact on overall consumer confidence. The headline sentiment indicator rose 1% to 114.9 in January, reaching its highest level since September last year.
 
Three of the five components that contribute to the Westpac MNI China CSI increased between December and January. Expected Personal Finances posted a significant increase to 118.4 from 113.2, while Expectations for Business Conditions in Five Years moved up to 136.6 from 131.3 in December. Partially offsetting these increases was a decline in Business Conditions in One Year which fell to 112.6 from 114.3 in December.
 
While consumers’ assessment of their current finances worsened further in January and remains at a low level, there were signs of an improvement in buying conditions. Durable Buying Conditions picked up slightly on the month as survey participants turned more optimistic about making a large household outlay.
 
Sentiment on the housing market continued to improve, with house price expectations rising again over the month and an increasing percentage of respondents reporting that real estate was the wisest place to keep their savings and that their primary motivation for saving was a housing purchase. Most measures of housing sentiment in the survey are recovering to the levels observed prior to the sharp deterioration in conditions that began in mid-2014.
 
January continued to see expectations for stock prices among active investors turn significantly negative, largely as a result of the equity market rout during the first week of the month. The continued improvement in the headline Westpac MNI Consumer Sentiment Indicator, though, suggests that the average Chinese consumer remained largely unscathed by the stock market downturn.
 
Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, “Consumers barely blinked during the stock market rout in August 2015, and it was a repeat performance in January with the Westpac MNI CSI pushing higher as markets fell and international concerns about China hit fever pitch once again. The message is that the average respondent to our survey has little direct exposure to the market. Still, the fact that two months after last summer’s crash confidence belatedly fell significantly shouldn’t be ignored with the possibility that the increased negativity on the economy eventually has a more significant impact.”
 
Westpac Senior Economist Matthew Hassan said that “The survey again highlights that, for China’s consumers, equity and broader financial market swings are less important for their direct impact on personal finances than the implied message about prospects for the economy. The first read for 2016 shows a stable but subdued consumer mood, with slightly more positive attitudes towards housing and durable purchases. The main weak spots continue to be around the near term outlook for business conditions and employment expectations. While the mix suggests there may be a little more traction to consumer spending and housing markets, overarching issues around growth in other sectors looks set to remain a significant inhibiting factor in 2016.”