Chinese consumer confidence, following no change in April and May, rose modestly in June.
The latest Westpac-MNI China consumer sentiment indicator increased 1.1% to 112.3, 7.7% below the survey’s long-run average.
The improvement was led by a 7.4% surge in confidence among people aged 55 to 64. Sentiment for younger age groups was largely unchanged from May.
Four of the survey’s five components improved from May. The subindices on personal finances, both now and in the future, increased by 0.9% and 1.7% respectively while expected business conditions for the year ahead, and looking out five years, rose by 1.7% and 2.4% respectively.. The only component that registered a decline was durable buying conditions, and indicator on spending plans, which slid 1.7%.
While there were some pleasing signs from the report, MNI indicators chief economist Philip Uglow notes that overall sentiment remains subdued.
“There are certainly some positives that can be drawn from the June data particularly the more upbeat readings on business conditions. Sentiment, though, remains at a subdued level in absolute terms with interest rate cuts and other supportive measures yet to provide a significant boost.”
Westpac’s senior economist Huw Mckay believes the result reflects the “new normal” for Chinese growth expectations.
“The scale and direction of the change in confidence is entirely consistent with the recent trend of incremental improvement in the official activity data. The level of confidence, which is 7.7% below average, reflects the ‘new normal’ of diminished growth expectations.
Interestingly, particularly in light of heightened volatility in recent weeks, Mckay also notes that an increasing number of survey respondents believe Chinese stocks are now expensive, implying “the market may struggle to top 5000 again in the short run.”