From Westpac:
The Westpac MNI China Consumer Sentiment Indicator (hereafter the CSI) rose 3.3pts from 109.7 in October to 113.1 in November. The CSI is now up 1.9% on a year ago but still 6% below its long run average. The Index is in line with the average recorded over the last 18mths.
This follows what was a steep correction in October. The intervening month has seen a further interest rate cut.
All of the five components of the CSI rose in November. The biggest rises were in ‘business conditions next 5yrs’ and ‘business conditions next 12mths’ – these two components were also the biggest movers in October’s sharp decline. Clearly the broader economy remains a key swing factor for confidence. ‘Family finances vs a year ago’ and ‘family finances next 12mths’ rose by 2.7pts and 3.1pts respectively. ‘Time to buy a major household item’ continued to be the most resilient component, rising 1.3pts after a milder 4pt fall in October. ‘Current business conditions’ (not part of the headline, but highly correlated with the PMIs & official IP) also posted a solid, though only partial, recovery from October’s heavy fall.
The employment indicator posted a robust 5.9%m/m gain but was still down 4.7%y/y. The picture around jobs is consistent with continued weakness in the labour–intensive export sector as well as the downward pressure operating on a range of blue collar domestic activities. Household inflation expectations lifted after a sharp fall last month but are still down 3.6%y/y.
Consumer attitudes towards real estate showed mixed results in November but remain notably less pessimistic than other aspects of the survey. Across the four key indicators, there was a further moderation in house price expectations and fewer consumers nominated real estate as the ‘wisest place for savings’ but assessments of ‘time to buy’ improved, as did the proportion nominating house purchase as a ‘motivation for saving’. The mix suggests investor demand continues to soften but owner occupier attitudes may be starting to improve.
Attitudes towards real estate continue to show a wide geographic divergence but with some notable shifts in recent months. Price expectations weakened sharply in the North East but posted a solid rise in the Central & West (C&W). Assessments of ‘time to buy’ have also shown a better rally in the hinterland. These shifts are notable given the greater demand–supply mismatch in the interior cities and may be a tentative sign that the sales rebound evident elsewhere may be starting to spread to these areas.
Overall, the November lift in sentiment is a welcome development. Although we viewed last month’s sharp drop as mainly an overdue correction bringing Chinese consumer confidence more in line with the softer tone coming from other economic data, there was a risk that sentiment could have gone on to register a deeper shock. A timely easing in policy appears to have helped spur this month’s rally. Despite this, Chinese consumers are clearly still anxious about the outlook for the economy and jobs. Sentiment around housing remains a notable positive but even here we are wary of recent slippage and what this may mean for a recovery that has yet to show convincing signs of broadening and strengthening.
Full report.
