China consumer sentiment falls to six-month low in August

Consumer sentiment in China fell to six-month low in August, following declining optimism toward personal finances, business conditions and the job market. However, consumers reported a slight improvement in their willingness to spend on big-ticket items.

The Westpac MNI China Consumer Sentiment Indicator decreased 2.2 percent to 111.5 in August from 114.0 in July, leaving sentiment at the lowest since February 2016.  While sentiment remained above the breakeven 100 level, meaning that optimists outnumbered pessimists, confidence was below the 12-month average of 114.4 and the series average of 119.7.

Further, deterioration in the outlook for households’ balance-sheets was accompanied by increased pessimism about expectations for jobs. The Employment Outlook Indicator edged further into contraction territory and declined to a six-month low of 92.2 in August.

Moreover, both current and expected measures of household finances pulled back, with the latter declining to the lowest level in the survey’s nine-year history. Consumers also turned less optimistic about future business conditions. The Business Conditions in One Year indicator moved back to the level seen at the start of the year, while prospects for the business environment in five years worsened slightly.

"Some of the August sentiment decline may be due to one-off events, with significant developments both in China (severe flooding in northern and central China) and abroad (‘Brexit’)," said Matthew Hassan, Senior Economist, Westpac.