China Consumption Monthly Roundup | October 2023 Chartbook

31 October 2023 / Report

Our Monthly Consumption Roundup tracks near-term consumption trends and underlying key drivers for China. Learn more about the key highlights for October.

Trusted Insights for What’s Ahead™

Consumption growth was the dominant contributor to Q3’s better-than-expected GDP growth. Retail sales continued to improve in September, thanks to an acceleration in goods sales and a low comparison base. In Q3, household spending posted strong growth and outpaced disposable income growth (measured in two-year average terms, to better account for base effects), indicating an acceleration in consumer spending appetite. Much of this growth was probably driven by the release of pent-up demand amidst the first post-pandemic summer travel season.

Looking at big-ticket spending, auto sales continued to increase, benefiting from ongoing policy support and the arrival of the traditional peak car sales season. This
growth momentum is likely to continue, but, due to a high base last year, growth rates will moderate.

However, property sales remained sluggish, despite the rollout of a series of supportive policies. This, along with the very high savings levels and weak consumer confidence, suggests that despite the bump in Q3 spending households remain cautious about the outlook.

Looking ahead, the low comparison base from Q4 last year and marginal improvement in income and employment will help to put a floor under consumption growth, but it will likely be difficult to maintain Q3’s growth momentum in Q4, for three reasons. First, the summer vacation and holiday effects which supported Q3’s consumption growth are fading. Second, the increase in household income doesn’t match the growth in spending and hiring intentions remain weak. Third, the property market hasn’t shown any enduring signs of stabilization and will continue to weigh heavily on consumer confidence levels.

Our Monthly Consumption Roundup tracks near-term consumption trends and underlying key drivers for China. Learn more about the key highlights for October.

Trusted Insights for What’s Ahead™

Consumption growth was the dominant contributor to Q3’s better-than-expected GDP growth. Retail sales continued to improve in September, thanks to an acceleration in goods sales and a low comparison base. In Q3, household spending posted strong growth and outpaced disposable income growth (measured in two-year average terms, to better account for base effects), indicating an acceleration in consumer spending appetite. Much of this growth was probably driven by the release of pent-up demand amidst the first post-pandemic summer travel season.
Looking at big-ticket spending, auto sales continued to increase, benefiting from ongoing policy support and the arrival of the traditional peak car sales season. This
growth momentum is likely to continue, but, due to a high base last year, growth rates will moderate.
However, property sales remained sluggish, despite the rollout of a series of supportive policies. This, along with the very high savings levels and weak consumer confidence, suggests that despite the bump in Q3 spending households remain cautious about the outlook.
Looking ahead, the low comparison base from Q4 last year and marginal improvement in income and employment will help to put a floor under consumption growth, but it will likely be difficult to maintain Q3’s growth momentum in Q4, for three reasons. First, the summer vacation and holiday effects which supported Q3’s consumption growth are fading. Second, the increase in household income doesn’t match the growth in spending and hiring intentions remain weak. Third, the property market hasn’t shown any enduring signs of stabilization and will continue to weigh heavily on consumer confidence levels.