China consumers are ‘not out of the woods yet’: Bank of America
CHINESE consumers remain downbeat about the world’s second-biggest economy, despite initial signs of improvement in recent activity data, a Bank of America (BOA) survey showed.
Expectations for future income have deteriorated, with share of respondents expecting a wage increase falling to 26 per cent from 29 per cent in August, wrote the US bank’s analyst Chen Luo and economist Helen Qiao in an Oct 11 research note, citing the poll findings.
Only 31 per cent of the interviewed consumers plan to spend more over the next six months, compared with 37 per cent two months ago, the survey showed.
The worsening sentiment contrasts with a recent pick-up in economic data that spurred a number of Wall Street banks including Citigroup to raise their forecasts for growth this year. It reinforces the case for more stimulus from Beijing, amid signs that policymakers are indeed preparing an expansion of fiscal policy.
The BOA survey, which was conducted Oct 6-8 and included 1,023 consumers, did see a rise in sentiment among residents of the largest, so-called Tier-1 cities. But that was overwhelmed by pessimism in Tier-2 and smaller cities.
Views of the property market have darkened, the survey also showed. Nearly 40 per cent of respondents expected home prices to decline over the next year, jumping from 27 per cent in the August survey. Plans for future home purchases or upgrades for the next six months remained flat, despite various housing stimulus measures rolled out by authorities across the country.
Those results are in line with a recent Morgan Stanley survey which found more than 80 per cent of Chinese households are still unwilling to enter the market or unsure about doing so when asked about their property purchase plans.
The BOA survey also indicated that consumer sentiment is likely to moderate after the recent holidays, with participants indicating potential cuts to spending on furniture, travel, and luxury apparel or footwear. BLOOMBERG
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