CHINESE consumer sentiment improved in August, snapping several months of decline, though it remains weaker than earlier in the year, two surveys have found.

Economists will be watching closely if the trend continues since consumption, a key driver of China’s economy, has slowed in recent months because of waning confidence and a housing market slump.

The share of consumers planning to spend more over the next six months and “trade up” to more expensive brands was higher in August than in June, according to a bi-monthly survey from Bank of America Corp (BOA). 

“Our latest August survey showed that consumers’ willingness to spend has improved slightly, likely helped by booming services demand during the summer,” BOA economists led by Helen Qiao wrote in a note.

A measure of Chinese consumer sentiment by US company Morning Consult also improved in August, while falling short of its 2021 peak.

Chinese consumer prices fell in July for the first time since 2021, partly reflecting weak consumer demand. But the core consumer price index, which strips out volatile energy and food costs, remained positive.

A NEWSLETTER FOR YOU

Friday, 2 pm

Lifestyle

Our picks of the latest dining, travel and leisure options to treat yourself.

Sign Up

With core prices still rising, that “shows improvement in domestic demand, so I think consumption might surprise on the upside in the coming months”, Dan Wang, chief China economist at Hang Seng Bank, told Bloomberg TV this week.

Consumption-related Chinese stocks have been lifted this week by record-breaking summer holiday cinema box-office figures, and stronger-than-expected earnings at Anta Sports Products, one of China’s largest athletic apparel companies. 

The MSCI China Consumer Discretionary Index has risen about 3.2 per cent this week, poised for its biggest advance in nearly a month. Still, the gauge remains at only around a third of its 2021 peak.

China retail sales growth slowed to 2.5 per cent in July, with falling property sales hitting demand for building materials and home appliances.

Consumer services growth was much stronger than housing-related goods, according to a Bloomberg Economics report this week, which noted “pockets of strength” in consumer spending such as summer-holiday related demand in August. BLOOMBERG