From Westpac:
The Westpac MNI China Consumer Sentiment Indicator increased 1.7pts from 116.5 in August to 118.2 in September. The Indicator is now 4.4% higher than a year ago and just 1.7% below its long run average.
The rally in Chinese consumer sentiment has come despite more equity market volatility, continued concerns about China’s growth prospects and more signs of weak conditions across China’s manufacturing sector. Notably, whereas the survey detail shows consumers have become much less pessimistic about business conditions and are nudging into positive territory in their views on real estate, their expectations for employment have shown far less improvement.
The September survey was conducted against a slightly more stable backdrop than the previous two months. China’s equity markets were comparatively settled in the survey period (September 1-14) although it did see more sharp declines in late August. That compares to the July survey, which was conducted while the Chinese equity market was in free-fall, and the August survey, which coincided with additional ‘shocks’ from the CNY devaluation and the Tianjin explosion.That the Westpac MNI China CSI has managed to sustain a steady rise throughout this period is strong confirmation that these developments have had little bearing on ‘ordinary’ Chinese consumers. Their confidence may instead be responding to policy moves – a 50bp cut in interest rates and a further easing in investor housing policy – and shifting conditions on the ground. The survey has a solid track record picking turning points in activity. The firming in sentiment clearly demands close attention.
Four of the five components of the Westpac MNI China CSI increased in September. The strongest gains were for ‘business conditions next 12mths’; ‘family finances vs a year ago’; and ‘business conditions next 5yrs’; with a more muted gain for ‘time to buy a major household item’ and a small decline in ‘family finances next 12mths’. Notably ‘finances vs a year ago’ posted the first above average read since June 2014, a sign that consumers are seeing a tangible improvement in conditions.
The employment indicator remains one of the weakest aspects of the survey, recording a slight dip in the month and down 0.9% over the last four months. That picture is consistent with the continued weakness in China’s export sector.
In contrast, the current business conditions indicator (not part of the headline composite) showed a sharp improvement in September (+7.9%). This is an intriguing result given the lack of improvement in both the PMIs and the IP data – measures that this index has had a close correlation with in the past.
Consumer attitudes towards real estate were unchanged in September, holding comfortably above long run averages. A moderation in house price expectations was offset by more upbeat views on ‘time to buy’. Responses on ‘savings’ also showed a more favourable view towards real estate and a broader modest easing in risk aversion.
More specific questions on plans showed solid increase in plans for shopping (+3.7%) and entertainmentspending (+2.4%) – the latter now back to an above average level – but slight declines in planned spending on dining out (–0.9% with a smaller 0.2% decline for western style fast food). All categories except planned spending on western style fast food are comfortably above year ago levels.
Perceived buying conditions showed a broad based improvement, with 1.5-2.5% gains across all categories except IT products (–1.0%). Buying conditions are seen as notably better for cars, with this index in line with its long run average.
The proportion of respondents indicated that their family plans to buy a car in the next 12 months rose to 14.4% from 13.2% in August and versus the long run average of 13.3%. The proportion indicating that they had made an online purchase in the last three months jumped from 55.6% to 62.8%, the highest reading since May 2014.
