Westpac MNI China Consumer Sentiment Indicator Rebounds - Improvement In Consumer Confidence Broad-Based

Consumer sentiment improved in December, led by a bounce-back in consumers‘ optimism about their expected personal finances which offset a pullback in durable buying conditions.
                                     
The Westpac MNI China Consumer Sentiment Indicator increased 1.5% on the month to 116.6 in December from 114.9 in November, recovering some of the ground lost in the month prior. The pickup leaves sentiment above the 12-month average of 115.1 and up 2.5% in 2016. Following a setback in Q3, consumer confidence ended the final quarter of the year on a fairly strong footing. For Q4, sentiment hit the highest level since Q3 2015.
 
Four of the five components that make up the headline Westpac MNI China Indicator increased between November and December. The biggest lift was around personal finances with a 4.1% rise in the component tracking respondents’ expectations for their future financial situation. Consumers’ assessment of the current level of their personal finances also edged up to 113.0 in December from 109.9 previously, marking the highest reading since May 2014.
 
The positive tone surrounding expectations for business conditions remained in December. Consumers were more upbeat about Business Conditions in One Year, this component now standing at its highest level since September 2016, while expectations for Business Conditions in Five Years ticked up only marginally.
 
The better outlook for business conditions and household finances was also reflected in an improvement in labour market sentiment. The Employment Outlook Indicator rose 1.1% to 96.7 in December from 95.6 in the previous month, although still below the breakeven level of 100.
 
The only negative came from durable buying conditions which moderated for the second consecutive month in December as our survey participants turned less optimistic about making a large household outlay. The Durable Buying Conditions Indicator edged lower to 109.7 in December from 112.6 in November. The less favourable assessment for buying conditions was not shared across all product segments though; car buying conditions remained steady while consumers planned to increase their spending on most of the smaller household items in the near term.
 
Commenting on the latest survey, Senior Economist of MNI Indicators Andy Wu said, “The December results argue that the risks regarding the 2017 growth outlook are again more balanced. Within the positive trend in the December survey details, our forward-looking indicators on the economy appeared to perform better than the current measures.
 
While the survey has a strong track record as a reliable gauge of the future path of the economy, we caution against becoming overly optimistic that China is past the worst of growth. It is clear that according to our survey results, Chinese consumers are still concerned about the outlook for jobs in 2017 and as a result, they continue to display a higher propensity to save.”
 
 Westpac Senior Economist Matthew Hassan said, “The main theme for the Chinese consumer in 2016 has been one of gradual improvement. While there have been several setbacks along the way and progress has at times been disappointing the picture at year end is of a more comfortable consumer. It’s been a similar story for the wider economy, with gradual gains but no ‘break out’ moves associated with a lift to outright strength. Looking to the year ahead, public sector activity is expected to support growth ahead of November’s all-important 19th National Congress. With private sector investment still subdued and question marks around the export environment, the Chinese consumer is likely to again be a key swing factor for the wider economy.”