Consumer sentiment fell slightly in August, from July’s already historically low level, hit by a sharp deterioration in consumers’ views about their current financial situation amid a weak employment outlook.
The Westpac MNI China Consumer Sentiment Indicator decreased 1.3% to 113.3 in August, significantly below the 121.7 reading seen at the beginning of the year. While sentiment remained above the breakeven 100 level, meaning that optimists outnumbered pessimists, confidence was below the 118.7 average seen over the past 12 months and the series average of 121.3.
Three of the five components that contribute to the Westpac MNI China CSI fell between July and August with Current Personal Finances declining to 104.5 from 108.5 previously, the lowest since July 2013. Consumers were also concerned about their personal finances a year from now. This measure fell to a thirteen-month low in August.
The weaker optimism on personal finances was underlined by a fall in the Employment Outlook Indicator to below 100, the lowest since March and more than seven points below the average seen over the past year.
While the outlook for business conditions in one and five years remained broadly stable, there was a sharp deterioration in the Current Business Conditions Indicator which fell to the lowest level for more than five years in August, as consumers failed to see any impact yet from the authorities’ actions to boost growth.
Regarding real estate, expectations for house prices fell for the second consecutive month, althoughconsumers are still relatively optimistic in a levels sense. Sentiment about buying a house fell further in August to the lowest level for a year, as consumers reassessed whether it was a good time to purchase a property with a greater proportion citing prices as the main reason it was a bad time to buy a house.
Commenting on the data, Chief Economist of MNI Indicators Philip Uglow said, “Confidence remains at a historically low level with consumers far less positive about their own financial situation and worried about the outlook for jobs. Compared with our noticeably more upbeat survey of Chinese businesses in August, consumers have yet to feel anybenefit from policy action to support growth.”
Westpac’s Senior International Economist Huw McKay commented that “Two months ago the employment indicator was sitting at levels that have been associated with policy easing in previous cycles. Consecutive declines from those already depressed levels in July and August, alongside the weaker official data for July, collectively provide a watertight case that it would be unwise for the authorities to declare victory too early on the growth front.”
“From a balance sheet perspective, the risk appetite of consumers vis-à-vis their preferred investment classes increased marginally over July, but in absolute terms they continue to deploy their savings very conservatively,” he added.