The decline in Chinese consumer sentiment accelerated in October, hitting a three year low as consumers further downgraded their views on employment, the housing market and the state of their personal finances.
The Westpac MNI China Consumer Sentiment Indicator decreased by 2% on the month to 110.9 in October from 113.2 in September. The drop leaves sentiment barely above the record low level of 110.8 seen in September 2011 and down 8.9% since the start of the year. While third quarter GDP came in slightly above the market expectation at 7.3%, it was the lowest in five years, a slowdown that was correctly presaged by this survey.
The rout in confidence was across the board with consumers’ views turning increasingly negative across most of the wide range of sentiment measures contained in the report. All five components which make up the Westpac MNI China CSI fell significantly between September and October, with Current Personal Finances putting in the best performance but still down 1% on the month while consumers' willingness to buy large household goods hit a series low.
Views on the outlook for the job market continued to worsen, with the Employment Outlook Indicator falling for the fifth consecutive month and remaining at the lowest level since February 2009, the height of the global financial crisis.
In spite of the numerous measures to stabilise the flagging real estate market, the outlook worsened again in October with House Buying Sentiment falling to the lowest for 2 years, and Expectations for house prices over the coming six months declining for the fourth consecutive month.
Commenting on the data, Chief Economist of MNI Indicators Philip Uglow said, “While the Chinese authorities have been at pains to emphasise the stability in the labour market, the weakness in our employment component tells a different story and is a growing source of concern. With consumer confidence close to record lows it suggests the authorities will maintain their attempts to underpin growth via continued selective easing.”
Westpac’s Senior International Economist Huw McKay commented that “The Q3 GDP data highlighted that growth is currently dependent upon exports, with domestic demand extremely subdued. Consistent with that, this survey has been reporting a lack of confidence in the household sector since late in the June quarter. As a consequence we continue to argue that a further easing of the policy stance is warranted, notwithstanding the nationwide housing package delivered on September 30. The survey detail argues that a mix of sector specific and macroeconomic measures will be required before the housing market returns to a durable growth trajectory.
“Westpac welcomes the announcement that China will soon begin to publish an internationally comparable unemployment rate. This new information will provide an extremely valuable complement to the labour market details embodied in the Westpac MNI survey” he added.
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Westpac MNI China CSI Tumbles And Hits Three Year Low - Consumers Increasingly Negative Across A Wide Range Of Sentiment Measures
Date 29/10/2014