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The Chinese University of Hong KongDepartment of EconomicsSeptember Survey on Public Perception of the Economic Conditions
The Department of Economics of The Chinese University of Hong Kong (CUHK) conducted a survey on public perception of the economic conditions from 29 to 30 September. The survey was conducted by Professor Andy Kwan Cheuk-chiu, Associate Professor of the Department of Economics, CUHK. A total of 506 Hong Kong residents aged 18 or above took part in the survey and answered questions about their family financial situation, their perception towards the business environment and the economic outlook, as well as their sentiment over consumption.
From table 1, it was revealed that only 11% of the respondents said they were financially “better off” than a year ago, decreased by 7 percentage points from the survey results in June this year. 51% said “the same”, while 37% said they were “worse off”, up 3 percentage points from June.
On consumer confidence, 10% of the respondents thought it “is” time to buy major household goods, while 69% said the opposite and 21% said they “don’t know or it’s difficult to tell”. Comparing with the findings in June, those saying “yes” decreased by 5 percentage points while those saying “no” increased by 3 percentage points.
13% of the respondents believed they would be financially “better off” in the coming year, recording a decrease of 3 percentage points from the June survey. 41% believed they would remain “the same”. 38% believed they would be “worse off”, showing a 9 percentage-point increase from the previous survey.
8% of the respondents were optimistic over the economic outlook in the coming year, saying the business environment would be “good”. 34% and 53% said “mediocre” and “bad” respectively. Comparing with the previous survey, those saying “good” dropped 4 percentage points while those saying “bad” increased by 19 percentage points.
31% said they were “optimistic” about the economic conditions of Hong Kong for the coming five years, dropped 2 percentage points from June. 29% predicted the situations would be “the same”. 32% said they were “pessimistic”, showing a 6 percentage-point increase from the previous survey.
The survey also found that 10% of the respondents expected the employment situation would “improve” and 25% expected it to remain “unchanged”. 60% thought it would “deteriorate”. Comparing with the June survey, those saying “improve” dropped by 10 percentage points, while those saying “deteriorate” increased by 26 percentage points.
The Index of Consumer Confidence Index (see table 2) is compiled from the scores of questions number 3, 4 and 5. The higher the index, the stronger people’s confidence about economic conditions.
The Index of Consumer Sentiment is compiled from the scores of questions number 1 to 5. A higher index indicates people are more optimistic about the present situation and future development of economic conditions.
Index of Employment Confidenceis compiled from the score of the sixth question. A higher index shows a stronger confidence about employment situation.
For the first two indices, the baseline is January 2000 with the index as 100. For the Index of Employment Confidence, the baseline is February 2000 with the index as 100.
The Indices of Consumer Confidence and Consumer Sentiment in September 2008 are 66.1 and 66.8 respectively, dropped 12.3 and 11.3 percentage points from the June survey, representing the fifth consecutive quarterly fall (calculated on a quarterly change basis). The consumer confidence of the Hong Kong people has been hard hit by the following factors: the recent financial tsunami, global economic recession, surging inflation and the significant drop in the Hong Kong stock market.
The Index of Employment Confidence is 44.1, plunged by 32.4 points from the June result, indicating a strong negative sentiment towards the employment outlook among the residents.
In conclusion, the consumer confidence of Hong Kong people has dropped drastically to the same level as that recorded during the SARS period in 2003, showing that the residents are lacking confidence towards the economic outlook. This will adversely affect local consumption. Together with the sluggish performance of the export sector, the local economy will eventually enter a period of recession.
