Caution prevails as consumers expect economy to strengthen

PUBLISHED : Friday, 09 April, 2004, 12:00am
UPDATED : Friday, 09 April, 2004, 12:00am

More people think Hong Kong's economy is improving, but most remain reluctant to loosen their purse strings, according to a quarterly survey of consumer confidence.

The poll found 5 per cent of 1,000 residents thought the economy would improve a lot and 51 per cent thought it would improve slightly.

The study was carried out in February by the Hong Kong Retail Management Association and survey firm Synovate.

The latest findings represent a significant rise in confidence compared with a similar poll by the association in November, when only 3 per cent thought the economy would greatly improve and 43 per cent predicted a slight improvement.

However, only 14 per cent had expected to spend a lot more on consumer items in the three months from February, down from 21 per cent in November. More people, or 74 per cent, said they would spend about the same, up from 64 per cent in November.

'The latest findings show people feel the economy is moving in the right direction and recovering, but most are cautious and don't want to spend more than they did in the past few months,' an association spokeswoman said.

The findings showed that people spent an average of 18 per cent of their salaries on investments and savings in February, compared with 13 per cent in November and 15 per cent last August.

The association said this was the highest recorded percentage of salaries spent on investments and savings since the survey started in November 2001.

'People invest more because bank interest rates are now practically zero. Also, they may be earning more again and so have more cash to invest,' a Synovate official said.

However, the latest data showed people were spending 23 per cent of their incomes on groceries, with previous figures ranging between 18 and 21 per cent. Synovate said this might be because the survey was conducted just after the Lunar New Year, when spending traditionally rises.