China: Consumer sentiment slips – Westpac

The Westpac MNI China Consumer Sentiment Indicator slipped back in November, dipping 1.9% to 114.9 from 117.1 in October, notes Matthew Hassan, Senior Economist at Westpac.

Key Quotes

“The decline follows a promising lift in the previous two months that started as a rebound from a weather-affected low in August. Stepping back from recent monthly moves, sentiment remains stuck well below its long run average of 120.”   

“All components retraced in November. The biggest pull back was in ‘time to buy a major item’ which fell 3.5% after having surged 10% to a six year high in October. Current business conditions reportedly improved, the ‘business conditions vs a year ago’ index up 1.8%. Note that this index is not part of the headline composite but is highly correlated with other measures of industrial activity.”

“The employment indicator declined 2.5% to be back below the average recorded over the last 2yrs. The persistent job loss fears over this period are clearly still not lifting. Consumer attitudes towards real estate had a mixed month, the housing composite ticking up slightly by 0.2% overall.”

“Consumers’ pulled back on purchasing plans with assessed buying conditions also downgraded. Responses on savings motivations and investment preferences continue to show a firmly risk averse tone.”

“Overall, while the November sentiment fall is not overly large it is another disappointing result. The gradual improvement in the consumer mood over the last two years, from extreme lows in late 2014, seems to again be losing its way. With confidence still materially below long run averages and consumers still concerned about job security and the economic outlook, China’s consumer recovery is clearly still fragile.”