Chinese consumers upbeat as outlooks brighten

April 23, 2017

by: FT Confidential Research

The FTCR China Consumer Index dipped slightly in April but remained well above the 68.8 historical average for the series. Indices measuring discretionary spending and current sentiment towards the economy fell a little, but households reported improvements in their incomes and were at their most bullish on China’s economic future in four years.

This strength was largely due to positive sentiment towards property, with our measures of plans to purchase real estate at or near record highs. Despite the relative softness in our overall discretionary spending read, this bullishness appears to be creating something of a wealth effect in April, with households reporting greater appetite to buy cars, clothing and luxury goods.

• Consumers said their discretionary spending growth moderated in April, with our index falling to a seven-month low.
• The FTCR China Discretionary Spending Index slipped 2.3 points month-on-month and 1.9 points year-on-year to 73.7.
• Our Discretionary Spending Outlook Index fell 0.4 points month-on-month and 1.3 points versus April 2016 at 73.3.

• Consumers reported that growth in their household incomes improved in April.
• The FTCR Household Income Index rose 0.6 points month-on-month and 2.2 points year-on-year, to 75 in April.
• Our Household Income Outlook Index retreated only slightly from March’s near-four-year high, dipping 0.4 points month-on-month but remaining 4.1 points higher year-on-year at 77.

• Consumers’ views on the economy’s recent performance remained positive in April, with outlooks at their healthiest in four years.
• Our Economic Sentiment Index fell 0.6 points month-on-month but rose 12.4 points year-on-year to 69.1.
• The FTCR China Economic Outlook Index rose 0.8 points month-on-month and 12 points year-on-year to 78.7, the highest reading since March 2013.

• Consumers reported a slight increase in their cost-of-living growth in April.
• Respondents estimated the average cost of living rose 6.7 per cent year-on-year, up from 6.4 per cent in March.
• They expected cost-of-living growth of 6.8 per cent over the next six months, down from the 7.4 per cent forecast in our March survey.

• Our House Buying Sentiment Index fell 1 point month-on-month from March’s record high, to 55.8, although this is still the second highest level since the survey was launched in July 2011. The index was 7.1 points higher than in April 2016.
• Our Property Investment Index hit a record high in April, rising 2.7 points month-on-month and 8.8 points year-on-year, to 52.4. This was also only the second result above 50 in the survey’s history.
• Our sub-indices measuring sentiment towards buying cars, clothing and watches and luxury jewellery all rose on both monthly and yearly bases in April.
• Sentiment towards domestic and overseas travel continued to diverge. Our index measuring sentiment towards domestic travel hit a series high, while that measuring sentiment towards overseas travel rose 0.8 points month-on-month but remained 5.5 points lower year-on-year.

• Our A-share Buying Sentiment Index — measuring whether consumers think it is a good time to invest in A-shares — rose 1.2 points month-on-month and 6.8 points year-on-year, to 51 in April, the first reading above 50 since June 2015, the month before the stock market crash.
• Buying sentiment towards investments including P2P, insurance and wealth management products was generally stronger in April.

The FTCR China Consumer survey is based on interviews with 1,000 consumers nationwide. For further details click here. This report contains the headline figures from the latest Consumer survey; the full results are available from our Database.

FT Confidential Research is an independent research service from the Financial Times, providing in-depth analysis of and statistical insight into China and Southeast Asia. Our team of researchers in these key markets combine findings from our proprietary surveys with on-the-ground research to provide predictive analysis for investors.