Consumer confidence falls in last quarter, with market rebound on the way

Shanghai's consumer and investor confidence fell in the fourth quarter of 2022 amid the struggling economic recovery, according to the latest survey.

The Shanghai University of Finance and Economics' quarterly Index of Consumer Sentiment in Shanghai Index dipped 1.7 points from the third quarter of 2022 to 100.7 points, extending the quarter-on-quarter declines but at a slower pace, and was 11 points lower than a year earlier.

The university's Index of Investor Sentiment rose to 111.17 points in October-December, reversing the earlier decline with a rebound of 8.65 points from the previous quarter, but still 9.43 points lower from the same period in the previous year.

For both indexes, a reading above 100 signifies optimism while one below 100 indicates pessimism.

The domestic economy continued to be affected by the coronavirus in the fourth quarter while the international economic situation was grim, together leading to a lower consumer confidence index figure as consumers maintained a cautious and wait-and-see attitude towards the development of the Shanghai economy, said Xu Guoxiang, director of the university's Applied Statistics Research Center.

He was speaking along with professor Wu Chunjie and associate professor Cui Chang of the university.

The indicator for the consumer evaluation of Shanghai's economic state fell 3.2 points from the third quarter to 113.3 points to hit a record low, indicating that consumers are feeling a tough economic situation for the period, but the figure was still in the positive territory.

Their evaluation index of income rebounded 4.8 points quarter-on-quarter to 99.1 points, while the evaluation index of employment fell 7.6 points.

The indicator of purchase intentions fell 6.2 points from the previous quarter in October-December. Among them, the index of home-buying intentions remained generally flat, edging down 0.8 points on the quarter, albeit tumbling 30.8 points from a year earlier. The intention to buy cars and durables, meanwhile, saw quarter-on-quarter declines of 2.2 points and 15.5 points, respectively.

Despite the city's consumer confidence still slipping in the fourth quarter, some slowdown was seen in the declines, Xu noted.

"Although facing heavy pressure, China's economic resilience, potential, vitality, as well as the policies to deal with negative impacts were paying off, to some extent stabilizing the consumer confidence."

In general, consumers are holding better expectations for future economic recovery compared with their assessment of the current economy, the indexes showed.

The Index of Consumer Expectation stayed steady compared with the previous quarter, dipping 0.4 points to 104.5 points. The indicator showing consumer expectations for Shanghai's economic situation saw an increase of 2.6 points to be 124.6 points, which was at a relatively low level since the survey but still well above the neutral level of 100 points.

Xu suggested the city should make further efforts to expand domestic demand and boost consumption, and promote the urban digital transformation to add new momentum to economic growth.

He also called for improving the business environment and optimizing policies on opening-up to maintain steady growth in foreign investment.