Consumers upbeat on hopes of mainland policy easing

Survey shows positive sentiment for business conditions and jobs at its highest this year

PUBLISHED : Thursday, 29 May, 2014, 1:05am
UPDATED : Thursday, 29 May, 2014, 5:56pm

Mainland consumers are most optimistic since January with expectations for business conditions, jobs, personal finances and spending power all pointing higher, according to a new survey of attitudes in the 30 biggest mainland cities.

The turnaround in sentiment from a low in March signals a belief the government will not allow a further deterioration in economic growth, which slipped below the official 7.5 per cent target in the first quarter to 7.4 per cent.

"While an undercurrent of caution still remains, the survey indicates that the anxieties gnawing away at the consumer through the first four months of the year lessened considerably in May," said Huw McKay, a senior economist at Westpac, which sponsors the MNI China consumer sentiment indicator.

The indicator's five sub-indices rose from last month, although it still left the overall sentiment gauge just a whisker below its long run average calculated from April 2007.

Latest government data - for last month - signalled relatively soft domestic demand in the economy. The nominal value of retail sales growth fell, although they accelerated in real terms when adjusted for inflation.

The latest household survey by the government depicted a steady growth in urban and rural household consumption since December last year. Real urban consumption spending rose 7.2 per cent in the first quarter from a year ago, accelerating from 6 per cent in the preceding quarter.

Current conditions in the consumer sector were their most vibrant so far this year, according to the survey, with a turnaround in employment prospects being a notable finding, alongside a pickup in optimism that home prices are set to continue to rise.

Beijing's efforts to cool house prices since 2012 have soured sentiment, but the recent relaxation of selected policy calming measures and a steady stream of government investment in infrastructure projects broadly appear to be filtering through to consumer perceptions.

The sentiment indicator builds on information MNI has gathered since 2007 and a databank of over 100,000 reference points to enable analysis of mainland consumer activity by city, region, income, gender and age.