Chinese consumer sentiment deteriorated in April, slipping back close to the level seen in November last year before the latest round of interest rate cuts began.
The Westpac MNI China Consumer Sentiment Indicator fell 3.1% on the month in April to 111.1 from 114.7 in March. The increased optimism evident in the March survey, which followed the central bank’s rate cut at the end of February, has been conclusively unwound, with the reality of weak underlying growth, confirmed by the Q1 GDP report, the stronger force in April.
Consumers grew less optimistic about their current personal financial situation, in contrast to a more resilient reading of the current business situation. The Current Conditions Indicator declined to 100.4 in April from 103.8 in March, the lowest since November 2011. Respondents continued to remain relatively more optimistic regarding the outlook, although even there, the Expectations Indicator slipped back in April to 118.2 from 121.9 in March. It’s now running a little below the average seen over the past four months.
Current Personal Finances fell sharply following March’s increase, leaving the indicator hovering close to the level it has been at since September 2014. Expectations for future personal finances also declined close to February’s level. Responses have been volatile over the last six months, with quite large monthly movements in both directions, reflecting the positive impact of policy announcements and the grinding reality of an economy where growth is under considerable downward pressure.
Expectations for business conditions over the coming year held up relatively well, continuing a run of surveys where most of the month-to-month volatility in the headline indicator has been attributable to swings in the personal finance questions.
Measures to support the housing market announced early in the month appeared to have an impact with sentiment on house buying increasing 2.6% on the month to 96.0, the highest since July 2014. That continues the slow recovery in attitudes towards real estate dating back to November last year.
The Stock Investment Indicator increased 3.1% to 96.4 in April, regaining some of the ground lost in March, led by a bounce back in investor returns amid the continued rally in domestic equity markets. While respondents’ expectations for future stock prices eased slightly in April, they have been trending higher since October 2014.
Commenting on the data, MNI Indicators Chief Economist Philip Uglow said, “The optimism that we saw in March fell away in April with consumers growing increasingly concerned about their current financial situation. Hopes that business conditions will pick-up over the coming 12 months held up well and remain a source for optimism, but overall sentiment remains under pressure.”
Westpac’s Senior International Economist Huw McKay said that “the investment preferences of Chinese consumers tilted in a moderately risk-seeking direction in April, with both domestic real estate and the local share market attracting a great share of adherents than a month ago. However, the scale of the movements have been relatively small, implying there remains plenty of room for a rebalancing of household portfolios towards asset classes offering the potential for capital gains. For now though, there is little sign that the spectacular gain in share prices over the last year is having a material impact on the conservative financial mind-set of the ordinary Chinese citizen.”
FTSE Mondo Visione Exchanges Index:
Westpac MNI China Consumer Confidence Declines In April - Rate Cut Boost Unwinds As Reality Of Weak Growth Weighs
Date 29/04/2015