Westpac MNI China Consumer Sentiment Indicator Moderates Slightly - Broad Based Softening In Confidence Measures

Following two consecutive monthly increases, the Westpac MNI China Consumer Sentiment Indicator eased to the lowest level since August, led by a pullback in durable buying conditions.
 
Sentiment towards both current conditions and future expectations weakened. The Expectations Indicator, made up of the three forward looking components, declined by 1.7% on the month to 117.3, while the Current Indicator, a composite of Current Personal Finances and Durable Buying Conditions, fell slightly more by 2.2% to 111.2.
 
The Westpac MNI China CSI softened 1.9% to 114.9 in November from 117.1 in October, offsetting October’s increase. The decline in sentiment was broad based with all five components edging lower in November. The Durable Buying Conditions Indicator, which measures the willingness of consumers to buy a large household item, registered a 3% decline to 112.6 in November and contributed the most to the moderation in overall consumer sentiment. Despite the pull back, this component  has seen the strongest gains over the last year, up 10.6%.
 
The long-term business outlook over the coming five years and Future Expectations for Personal Finances also made meaningful contributions to the fall. Business Conditions in Five Years decreased 2.2% to 128.9 in November, the lowest level since February while Expected Personal Finances eased to 109.0 from 111.5 in October. Moreover, the Current Personal Finances Indicator was down 1.3% to 109.9 in November. By comparison, the business outlook over the coming year looked relatively stable, with Business Conditions in One Year marginally down to 114.1 compared with 114.8 in the previous month.
 
The Employment Outlook Indicator fell further to 95.6 in November from 98.0 in October, the second consecutive monthly fall. It remained below the 100 breakeven level for the fifth consecutive month, indicating most consumers are not optimistic about the employment outlook over the coming year. Pessimism among consumers is not shared by employers. In our sister MNI Business Sentiment Survey for November there was a pick-up in the Employment Indicator, a measure of labour demand among businesses.
 
While the headline Real Estate Investment Indicator remained broadly flat during the month, tightening measures to minimise the risk of a housing bubble implemented previously by the authorities appeared to continue to have an impact; house buying sentiment decreased further to a four-month low of 96.5 in November. The indicator for house selling sentiment rose, by 1.1% to 101.3, registering the highest outturn since April. Note that an increase in the House Selling Sentiment Indicator has a negative effect on the overall indicator.
 
Commenting on the latest survey, Senior Economist of MNI Indicators Andy Wu said, “Consumer confidence posted a slight decline in November, consistent with the recent flow of negative official retail sales data. Consumers were particularly worried about the future state of business conditions, the outlook for jobs and subsequently, their future personal finances. The pullback in leisure spend and buying conditions across a range of items including cars, will cloud the outlook for retail sales and consumer spending growth somewhat. While our sister business survey shows a general pick-up in confidence among businesses, the slightly more subdued consumer sentiment cautions about getting too optimistic over the outlook for the wider economy in the near term.”
 
Westpac Senior Economist Matthew Hassan said, “While the November sentiment fall is not overly large it is another disappointing result. The gradual improvement in the consumer mood over the last two years, from extreme lows in late 2014, seems to again be losing its way. With confidence still materially below long run averages and consumers still concerned about job security and the economic outlook the consumer recovery is clearly still fragile.”