ANZ-Roy Morgan China Consumer Confidence - May 2014
CHINA CONSUMER CONFIDENCE REMAINS STABLE DESPITE SLOWING GROWTH AND HOUSING MARKET UNCERTAINTY.
HIGHLIGHTS
- ANZ-Roy Morgan China Consumer Confidence Index remained stable at 152.5 in May, compared with 152.6 in April.
- Consumer confidence varies in different cities. While Shanghai and Guangzhou remained upbeat, the sentiment in Beijing continued to trend lower. In China’s small and medium cities, consumer confidence generally saw an improvement.
- The survey sees a clear declining trend of inflation expectation. In May, the respondents projected China’s price level will rise by 4.0% in the longer term, compared with 5.2% in January and 4.5% in April.
- Short term confidence also eroded. The respective sub-index has declined 3.9 percentage points in May to 58.5, compared with 62.4 in April.
ANZ GREATER CHINA CHIEF ECONOMIST LI-GANG LIU SAID:
“The May consumer confidence has shown signs of stabilisation, which could foretell a possible pick up in China’s retail sales. However, a further decline in inflation expectation suggests that domestic demand remains lukewarm. This suggests that the retail sales figure in May will not see a significant boost, either.
As Chinese enterprises are still facing very high funding costs with a falling profit margin, this implies that the monetary policy condition may have become too tight. We maintain our call that a cut of reserve requirement ratio is necessary. This will provide a strong policy signal to prevent negative sentiment from deteriorating further. By relaxing monetary policy, the government can send a strong signal that it will not sacrifice growth while engaging economic reform.
Today1 is the launch of the ANZ-Roy Morgan China Consumer Confidence survey, which compliments the surveys in Australia, New Zealand, and Indonesia. More consumer confidence surveys for other Asia Pacific economies will be forthcoming.”
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