Chinese consumer confidence ripped higher in March, rising to the highest level seen since September last year.
The latest Westpac-MI consumer sentiment index jumped by 6.1% to 118.1, led by greater optimism toward personal finances, the housing market and buying conditions. A reading of 100 is deemed neutral, meaning the number of optimists is equal to the number of pessimists.
At present, the index currently sits at the second highest level seen since May 2014, and is up 3.0% from 12 months ago.
All five components that make up the headline index increased during the month, led by significant gains in current household finances and durable buying conditions.
Westpac noted a large number of respondents citing higher income as the reason for the improvement in their finances.
The table below, supplied by Westpac, reveals the movement in each survey component over the past six months.
“The PBOC’s latest RRR cut and the Chinese authorities’ commitment to support growth at the March NPC [National People’s Conference], were at least in part behind a more optimistic outlook for the economy,” said Westpac.
“The Business Conditions in One Year Indicator rose sharply to stand at the highest since December 2013 while Business Conditions in Five Years and Current Business Conditions also picked up. Despite wider optimism on the economy, the Employment Outlook Indicator showed a more muted improvement and remained at a relatively weak level overall.”
In what should come as no surprise to those who have been tracking the recent strength in China’s property market, particularly in large tier-one cities, sentiment towards the housing market surged.
“March saw a notable improvement in sentiment with expectations for house prices over the next three months increasing to the highest since June 2014,” notes Westpac.
“Respondents were also more optimistic about the buying environment, with the House Buying Indicator increasing to 100.4 in March from 91.8 in February. The latest improvement was the first time it has risen above 100 since May 2014, indicating that a greater proportion of respondents believe it is a good to buy a house than those who think it is not.”
Property prices are higher, and now Chinese stocks are following suit. While the fundamentals underpinning the gains remain debatable, it’s little wonder that consumers are feeling optimistic given the perceived increase in wealth.
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