Consumer confidence in China has sunk to near historic lows, with the confidence index sinking from 86.2 in June to 86 in July.
That is just above the all-time low of 85.5 recorded in November 2022 during the Covid-19 pandemic, according to local media.
The employment sub-index hit a record low of 71.6 in July, Nomura said. The investment bank said consumer confidence has struggled to recover since the pandemic because of the property downturn.
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Nomura analysts led by Ting Lu suggested that bolder stimulus measures were needed from Beijing to address issues in the property sector, saying sustained weakness in consumer confidence would hinder economic recovery.
Housing prices had decreased nearly 30% from 2021 highs, according to Beike research in 25 large cities, and that had impacted household finances and contributed to consumer caution regarding spending and job security.
Retail sales grew slightly in July to 2.7%, but overall consumption remained below pre-Covid trends.
“Non-food inflation remains largely subdued, in line with our long-held cautious view on the release of pent-up demand,” it said in a note on Wednesday (Sept 5).
“The sustained weakness in consumption could be due to new headwinds, such as falling stock prices, tepid wage growth, rising fiscal tensions and capital flight amid geopolitical tensions,” it said.
- Jim Pollard
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