While the rest of the world frets about the outlook for the Chinese economy, its citizens don’t share those pessimistic views.
The latest Westpac-MNI China consumer sentiment index underlines this point, rising 1.5% to 115.9 in June. It is now 3.2% above the levels of a year ago.
Although below the long-run average of 119.8, a figure above 100 indicates that optimists outnumber pessimists.
Here’s Matthew Hassan, senior economist at Westpac, on the June survey findings.
Most components posted solid improvements in June with downgraded views on the medium term outlook the one offsetting drag. Assessments of ‘family finances vs a year ago’ posted the biggest rise, up 3.4% but coming off a 5.5% fall in May. Consumers’ near term expectations also improved: ‘family finances next 12 months’ up 3.1% and ‘business conditions, next 12 months’ up 2.7%. Views on ‘time to buy a major item’ firmed by 1.4%. The medium term outlook is the main weak spot, ‘business conditions, next 5 years’ down 2.1% in the month. This component remains 6.8% below its long run average and is the only component still down on levels a year ago.
Although not part of the composition of the headline index, Hassan notes that sentiment towards business conditions compared to a year earlier jumped by 5.2%, leaving it at a two-year high.
“This index is not part of the headline composite but is highly correlated with the PMIs and official industrial production,” says Hassan.
Something to consider before the release of major Chinese economic data over the weeks ahead, including Q2 GDP on July 15.
In another positive sign, the survey’s employment indicator jumped 4.4%, leaving it too at a two-year high.
Elsewhere perceptions towards the housing market remained firm, mirroring the recent recovery in house prices across the country.
“The proportion nominating real estate as the ‘wisest place for savings’ rose nearly 2 points to be slightly above its year average and the proportion nominating house purchase as the primary ‘motivation for saving’ posted a smaller 0.6 point gain but was also comfortably above its 2 year average,” notes Hassan.
So what to take from the survey?
Clearly, negative sentiment towards the economy outside of China is not being felt by its own citizens, at least from a holistic perspective.
While markets now have a tendency to dismiss official Chinese data, based on the premise that it cannot be trusted, this is a private sector survey capturing views of those who are experiencing conditions first hand on the ground, not from a desk in New York, London or Sydney.
On that score it appears the economy is anything but imploding.
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