China Economy

China consumer sentiment edges up but still subdued

But mainland consumers remain concerned about personal finances and property market

PUBLISHED : Wednesday, 30 July, 2014, 1:40pm
UPDATED : Monday, 30 May, 2016, 5:01pm

Consumer sentiment on the mainland ticked up this month as expectations for long-term business conditions improved, thanks to Beijing's pro-growth policies, a Westpac MNI survey found.

But confidence remained subdued, with households lowering their expectations in regard to personal finances and the prospects for the property market.

The Westpac MNI consumer sentiment index rose to 114.8 from a near-one-year low of 112.6 last month. Sentiment still held up above the 100 threshold, meaning optimists outnumbered pessimists, but it remained below the 118.9 average seen over the past 12 months.

"Consumers appear more convinced that actions taken by the government will help support the economy over the long term but remain less optimistic about the current state of business or their own personal finances," Philip Uglow, chief economist at MNI Indicators, said in a statement.

The mainland has rolled out a series of measures, including heavier investment in infrastructure, tax cuts for smaller businesses and easing of credit, to bolster economic growth in an attempt to ensure this year's target of about 7.5 per cent can be met.

In the second quarter, the economy expanded 7.5 per cent from a year earlier, a tad faster than the 18-month low of 7.4 per cent in the first three months.

HSBC/Markit's preliminary purchasing managers' index for the manufacturing sector rose to an 18-month high of 52 this month, exceeding last month's final reading of 50.7.

Four of the five components of the Westpac index rose from last month, the statement said. "Expectations for business conditions in five years" climbed to 135.6 from 126.4, recovering ground lost in June.

However, the "business conditions in one year", "expected personal finances" and "durable buying conditions" components increased only marginally from record-low levels.

Households' perception of their "current personal finances" declined further to 108.5 from 109.7 in June, hitting its lowest level since August last year.

"House price expectations" eased from a three-year peak last month. New data added to the survey this month on savings also reflected "some unease" over the housing market, with 16.4 per cent of respondents believing real estate was the wisest place to keep their savings, down from 20.1 per cent.

The overall rise in consumer confidence mirrored the fact that Hong Kong and mainland securities had captured the attention of investors in mutual funds and exchange-traded funds recently.

Hong Kong mutual funds and exchange-traded funds experienced a US$310 million inflow last week, the heaviest in almost 18 months.

The US$139 million net inflow into the mainland marked the seventh consecutive week of net inflows, bringing the year-to-date total to US$2.8 billion, the most in Asia-Pacific, according to brokerage Jefferies.