Chinese consumer sentiment tanked in October, dropping to the lowest level on record.
According to the latest Westpac-MNI consumer sentiment index, confidence slid by 7.2% to 109.7 during the month, leaving the index at the lowest level seen since the survey first began in 2007.
Westpac MNI China consumer confidence October 2015 (1)Business Insider Australia
All of the survey’s five subcomponents deteriorated with particularly large declines registered for business conditions, both in the year ahead and looking out five years. Perceptions towards personal finances also fell, with the measure on future finances sliding 7.3%, marginally outpacing a 5.3% deterioration in the current finances measure.
“The drop in confidence was most acute among 35- to 54-year-olds, with sentiment plunging 11.2% between September and October,” wrote Westpac.
“In contrast confidence among the youngest and oldest age cohorts (18-34 and 55-64) declined more moderately by 3.3% and 3.2% respectively.”
According to Huw McKay, senior international economist at Westpac, weaker economic conditions may have taken a toll on sentiment levels.
“This result openly questions the resilience of the Chinese consumer to the discouraging state of the real economy,” said McKay.
“While it was understandable that consumers stood aloof from the volatility in the equity market earlier this year, given their low median exposure, there is no escape from the reality of an economy whose traditional growth engines are sputtering, thus threatening the outlook for jobs. I expect further efforts to support the economy will emerge in due course.”
The worrying data releases comes just a day after the release of a separate Chinese consumer sentiment survey from McKinsey which revealed the vast majority of Chinese consumers still had strong levels of confidence in the outlook for the economy, especially among middle-aged respondents.
The divergent views once again clouds the view that Chinese consumers, despite slowing economic growth and massive rout in the nation’s stock market, were largely immune to the weakness seen in the industrial segments of the economy.
While one month does not make a trend, should the weakness in the Westpac-MNI survey extend in period ahead, it will surely bring into question whether China’s economic rebalancing – reliant upon increased growth in household consumption and growth in services industries – is heading in the right direction.
Read the original article on Business Insider Australia. Copyright 2015.