In recent months when we have looked at the economic confidence figures from the Bloomberg/YouGov Household Economic Activity Tracker (HEAT), we have seen that the Chinese consumer is buoyant while the UK one is generally negative about the next 12 months. The figures from May show that this position remains with a 68 point difference between the net confidence figures in the two countries (China +42, UK -26).
However, that gap has narrowed in each of the last four months, with early signs that confidence has improved slightly in the UK and cooled to some degree in China. In China, confidence is now 12 points worse than it was in February (+42 compared to +54) while in the UK it is 10 points better (-26 compared to -36).
To a large extent this is reflected in people’s actual circumstances, i.e. how their financial situation has changed in the last month. In China this number fell from +27 in February to +17 in May, whilst in the UK it rose from -35 in February to -23 in May.
So in China we still have good numbers but getting worse, and in the UK it remains bad but it’s getting better.
One spot where concern in China is increasing, is with respect to inflation and this is impacting how people purchase. In February, UK and China consumers were nearly identical in reporting an increase of price-consciousness compared to the last month (60% in China said they were more price-conscious; 59% in the UK). Over the past three months, there has been divergence, as Chinese consumers become more price conscious (66% reporting increased price consciousness versus 51% in the UK).
Worries about inflation continue to make news in China and we are seeing those worries register at the consumer level.
