China consumer, jobs confidence plunge
Outlook for jobs at lowest level in more than five years as households start to lose faith in government's ability to arrest slide in economy
PUBLISHED : Wednesday, 24 September, 2014, 10:20am
UPDATED : Thursday, 25 September, 2014, 6:41am
Victoria Ruan in Beijing [email protected]
Consumers are nervous about the economy. Photo: Reuters
Consumer confidence on the mainland is at its lowest in nearly three years, according to a nationwide survey, with the outlook for jobs at its worst since February 2009, when millions of factory workers had lost their jobs as the global financial crisis brought world trade to a standstill.
The second successive monthly fall in the Westpac-MNI China Consumer Sentiment Index showed households are getting less confident in the government's ability to arrest a slide in the economy
The index has now fallen by 7 per cent since January, with consumers growing increasingly concerned about the state of household finances, a statement accompanying the publication of the index said.
The quarterly reading of sentiment is at its lowest level since the fourth quarter of 2011 and highlights the struggle ahead for Beijing to transform its economic model from export-driven investment to domestic consumption.
The faltering jobs outlook - the survey's employment indicator sank for a fourth straight month - is likely to be of particular concern to the government, as Beijing considers a stable jobs market its top economic policy goal.
Goldman Sachs echoed consumers' concerns as it slashed its forecast for China's growth for 2015-2017. The US investment bank predicts gross domestic product growth will slow to 7.1 per cent next year, down from the previous forecast of 7.6 per cent.
"We see further moderation in growth to 6.7 per cent by 2017, roughly tracking potential growth lower," Goldman Sachs said.
The subdued sentiment "raises questions about whether the authorities' efforts to support the economy since the spring will be sufficient to keep growth in line with the 7.5 per cent target this year", said Philip Uglow, chief economist of MNI Indicators.
The International Monetary Fund was more upbeat, with Changyong Rhee, director of the IMF's Asia and Pacific department, saying growth in China next year would likely be "well above" 7 per cent. The IMF has a 7.4 per cent growth forecast for China in 2014, just shy of the government's target of 7.5 per cent.
The gloomy view of consumers on jobs chimed with that of manufacturers. The HSBC flash purchasing managers index on China's manufacturing, released on Tuesday, showed the employment sub-index had slid to its lowest level since March 2009.
The PMI overall, however, came in slightly above analysts' expectations, indicating that factories were running at a somewhat faster pace in September than in August.
Mainland stock markets rose to their highest levels in seven weeks yesterday, rebounding from a near three-week low on Monday ahead of Tuesday's release of the flash PMI readings.
