Chinese consumer sentiment languished close to record lows in February as respondents reported a further deterioration in their personal finances to the weakest since December 2011.
The Westpac MNI China Consumer Sentiment Indicator decreased 0.1% on the month to 112.0 in February from 112.1 in January. Following the decline in confidence throughout 2014, sentiment has stabilised in recent months, but is hovering close to the record low of 110.8 seen in September 2011.
Both Current and Expected Personal Finances fell in February from already low levels. The former declined to the lowest since December 2011, while expectations gave up all the gain seen in January. The weakest responses came from higher income households and the 55-64 age group. Lower income households and the young were more positive. A rise in the proportion of respondents nominating the “self-insurance” categories of retirement and health care as their primary reason for savings is consistent with a rising level of anxiety among the older cohort.
The other three components that make up the Westpac MNI China CSI increased between January and February. Both short and long-term measures of business expectations improved slightly, widening the gap to current business conditions, which declined. There was also a pick-up in Durable Buying Conditions. This may well reflect declining prices at the factory gate flowing through to the perception of ‘bargains’ at the retail level.
Sentiment towards the housing market improved somewhat, with house price expectations increasing notably over the month and an increasing percentage of respondents reporting both that real estate was the wisest place to keep their savings and that their primary motivation for saving was a housing purchase. However, attitudes differ substantially by region, reflecting the narrow nature of the property market stabilisation to date.
Commenting on the data, MNI Indicators Chief Economist Philip Uglow said, “While there has been a stabilisation in confidence in recent months following the decline in 2014, sentiment remains at a historically low level. So far there’s sparse evidence that the more accommodative policy stance has had a material impact on our respondents.”
Westpac’s Senior International Economist Huw McKay commented that “Chinese consumers are dealing with conflicting emotions at present, with the bottoming in the property market in the coastal areas and a somewhat improved employment and business outlook juxtaposed with continued unease regarding their personal financial situation. While the overall tone of the survey has improved marginally over the last four months, the aggregate state of confidence is consistent with no more than an incremental gain in discretionary consumption outlays.”
FTSE Mondo Visione Exchanges Index:
Westpac MNI China CSI Stable In February: Confidence Remains Low - Real Estate Sentiment Improves But Household Finances Under Pressure
Date 25/02/2015