CUHK
News Centre

The Department of Economics of The Chinese University of Hong Kong (CUHK) conducted a survey on public perception of the economic conditions from 27 to 29 June. The survey was conducted by Professor Andy Kwan Cheuk-chiu, Associate Professor of the Department of Economics, CUHK. 502 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 18% of the respondents said they were financially “better off” than a year ago, decreased by 7 percentage points from the survey results in March this year. 48% said “the same”, while 34% said they were “worse off”, up 17 percentage points from March.

On consumer confidence, 15% of the respondents thought it “is” time to buy major household goods, while 66% said the opposite and 19% said they “don’t know or it’s difficult to tell”. Comparing with the findings in March, those saying “yes” decreased by 7 percentage points while those saying “no” increased by 6 percentage points.

16% of the respondents believed they would be financially “better off” in the coming year, recording a decrease of 9 percentage points from the March survey. 48% believed they would remain “the same”. 29% believed they would be “worse off”, showing a 12 percentage-point increase from the previous survey.

12% of the respondents were optimistic over the economic outlook in the coming year, saying the business environment would be “good”. 46% and 34% said “mediocre” and “bad” respectively. Comparing with the previous survey, those saying “good” dropped 18 percentage points while those saying “bad” increased by 18 percentage points.

33% said they were “optimistic” about the economic conditions of Hong Kong for the coming five years, dropped 11 percentage points from March. 32% predicted the situations would be “the same”. 26% said they were “pessimistic”, showing a 9 percentage-point increase from the previous survey.

The survey also found that 20% of the respondents expected the employment situation would “improve” and 39% expected it to remain “unchanged”. 34% thought it would “deteriorate”. Comparing with the March survey, those saying “improve” dropped by 15 percentage points, while those saying “deteriorate” increased by 20 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 June 2008 are 78.4 and 78.1 respectively, dropped 21.6 and 22.6 percentage points from the March survey, resulting in the second biggest fall since the indices were launched (calculated on a quarterly change basis). The consumer confidence of the Hong Kong people has been hard hit by the following factors: the recent surging inflation, the subprime mortgage crisis, weak US economy, and the macroeconomic adjustment measures undertaken by the Chinese government.

The Index of Employment Confidence is 76.5, slumped by 30.2 points from the March result, indicating a sharp reduction in confidence towards the employment outlook among the residents.

In conclusion, the consumer confidence of Hong Kong people has dropped drastically to nearly the same level as that recorded during the early post-SARS period in 2003, showing that the residents are lacking confidence towards the economic outlook. This will directly affect their local consumption and will slow down the local economic growth in the coming quarters.