Chinese consumer sentiment eased slightly in April, although improvements across a range of spending gauges in the survey point to a better outlook for retail sales and consumption expenditure in general.
The Westpac MNI China Consumer Sentiment Indicator decreased 0.3% on the month to 117.8 in April from 118.1 in March, managing to hold on to most of March’s sharp rebound. Confidence has increased 2.5% since the start of the year, although it still sits below the series average of 119.9.
The slight pull back in consumer sentiment was led by a fall in expectations of Business Conditions in a Year’s time to 119.3 in April from 122.8 in March. Consumers were also less confident about the outlook for their personal finances, as reflected by the Expected Personal Finances Indicator, which fell 1.8% to 116.1 in April.
More positively, respondents were more optimistic about their current personal financial situation with the Current Personal Finances Indicator increasing 1.1% to 110.3 in April, the highest since May 2014. Moreover, a range of metrics aimed at assessing how willing respondents are to purchase goods or spend on leisure activities increased significantly. Both the Shopping and Dining Out Expenditure Indicators increased to the highest since July and February 2014 respectively. The high correlation between the leisure spending data and official retail sales figures suggest April could be a good month for the latter.
Buying conditions for IT products, phones and other appliances all rose sharply, while the wider measure of Durable Buying Conditions hung on to the sharp gain made in March. This increased optimism spilt over to the car market where respondents continued to revise higher their expectations for car purchases over the coming year. The Car Purchase Expectations Indicator increased to 109.1 in April from 103.4 in March, the highest since October 2010.
On the back of the numerous policy measures taken to contain widespread real estate market imbalances, optimism over the housing market faded marginally in April. The House Price Expectations component eased 3.3% to 120.1 in April, although remained at a relatively high level. Against this, the share of respondents reporting it was a ‘good time to buy a house’ rose again, while 17.3% of consumers nominated domestic real estate as the ‘wisest place for their savings’, up notably from the low of 13.6% in March.
Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, “While the headline Westpac MNI China Consumer Sentiment Indicator fell marginally on the month in April, this belies a more robust picture beneath the surface. Most notably the far more positive gauges on leisure spend and buying conditions across a range of items including cars, should help to underpin retail sales and consumer spending growth.”
Westpac Senior Economist Matthew Hassan said, “The Chinese consumer continues to show promising signs of improvement. The first few months of 2016 have registered a solid lift in sentiment coupled with increasingly positive readings on housing and spending related questions. There are still weaknesses – the anticipated recovery in business conditions remains elusive and consumers’ job loss concerns remain elevated – and it remains to be seen how well the improved mood is sustained but prospects for a lift in Chinese consumer-related demand now look somewhat better than they did at the start of the year.”
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Westpac MNI China Consumer Sentiment Indicator Edges Slightly Lower In April - Survey Points To Improved Outlook For Spending
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