SCMP Wednesday, July 11, 2001
Consumers ready to splash out: survey
Consumer confidence is on the rebound as worries over job security and economic stagnation ease, according to a survey by the Chinese University of Hong Kong.
Andy Kwan Cheuk-chiu, assistant professor at the university's economics department, said people were more willing to spend cash than a few months ago thanks to interest-rate cuts and a vigorous labour market.
The consumer confidence index in June was slightly better than that of March, rising from 75.5 points to 78, according to the latest department survey.
Thirty-four per cent of 512 respondents said they were optimistic about Hong Kong's economy over the next five years, seven percentage point up from March.
More than a third said it was a good time for big-ticket purchases, such as furniture and electrical appliances.
Dr Kwan said the survey's results showed the retail sector was on the road to recovery and he expected the economy would be better in the last quarter of the year.
"The interest-rate cuts at the beginning of the year are starting to show effects. Consuming power in the US is also improving. So the economic growth in the second half of the year should be better," he said.
Dr Kwan said unemployment would also drop as there were fewer large-scale lay-offs. "The labour market is vigorous. I think the unemployment rate will go down to about four per cent by the end of the year," he said. "Although wage increases are still sluggish, people feel more secure about their jobs. If you don't need to worry about losing your job, you will have the confidence to spend."
Dr Kwan said other positive elements, such as China's imminent entry into the World Trade Organisation, would further boost people's confidence and encourage them to spend. "These are all good news for our long-term economic prospective. Accordingly, people will look to a brighter future."