19 May 2005
Hong Kong
Hong Kong people are riding a tide of confidence in the economy at the moment and things couldn’t be better, according to the latest ACNielsen Hong Kong Consumer Confidence Index. In fact, people are so confident these days that the Consumer Confidence Index record is twice broken for the last two quarters in a row, scoring an Index of 102 in April 2005, the highest ever since 1989.
First established in the 1980s, the ACNielsen Hong Kong Consumer Confidence Index is conducted quarterly to gauge consumer confidence in the economy, their purchase intentions for big-ticket items and their confidence in the future of Hong Kong. The Index is released in February, May, August and November every year.
Confidence in the Economy
Conducted in mid April among 1,033 consumers aged 15-54, the latest Consumer Confidence Index showed a score of 102 for Hong Kong consumers’ confidence in the economy, up by three points from 99 in the last round (See Chart 1). It reflects a noticeable shift in Hong Kong people’s attitudes, where less feel that the economic situation is bad (10% in April 2005 vs. 22% in January 2005) and more believe the economy will continue to improve in the next 12 months (50% in Apr ’05 vs. 46% in Jan ’05).
“As well as showing strong consumer sentiment overall, the latest ACNielsen Consumer Confidence Index has also found a turnaround in the attitudes of several consumer segments,” said Ms Amy Lee, Director, ACNielsen consumer research Hong Kong.
“For example, in previous surveys, women were less optimistic than men, but this time round women (52%) have become more optimistic than they were in the previous round and slightly more than their male counterparts (48%) in the ecomony in the next 12 months.”
The strong consumer confidence is being felt not only among the high income group but also the lower income groups. According to ACNielsen, consumers with household income below HK$18,000 per month recorded the greatest jump in confidence in the economic outlook (See Chart 2). And such an upbeat attitude prevailed among these consumers even when it came to judging their personal financial situation, despite the majority (69%) who believed their personal financial situation would remain the same in the next 12 months.
“The turnaround of attitude was also observed among different income groups. In previous surveys, the higher income group has been feeling upbeat while this time round, the optimism has spread to the lower income group as well,” added Ms Lee. “This is a good sign as it means the economic rebound has started to filter through to a wider spectrum in the society.”
As the study reveals, the top three reasons for feeling good about the economy were: “The economy has improved…” (35%); “More people are spending…” (30%) and “Lower unemployment rate…” (22%).
As positive economic momentum gathers pace, households tend to loosen their purse strings and dine out more often, reducing the amount spent on in-home dining, as shown by information from ACNielsen’s consumer panel, HomescanTM . The growth for in-home grocery spending in the first quarter of 2005 slowed and actually stayed flat after the continued growth in the previous two consecutive quarters. Fresh Food consumption was impacted most and led to a decline by about 10 percent in frequency of related shopping and spending respectively compared with the same quarter in 2004 (See Chart 3).
In particular, high income households (monthly household income HK$30,000 or above), households with children aged five to 19, and households with older grocery decision maker (aged 45+) reduced their in-home dining more than average in the past quarter.
Purchase Intentions
The ‘shopping-spree’ atmosphere around the city since 2004 continued over the last two quarters. As the latest Index reveals, Hong Kong people kept up with their spending desires with the ACNielsen Purchase Intention Index for big ticket items like furniture, real estate, major household appliances, and vehicles etc remaining at 102 (See Chart 4), unchanged from the last round. However according to Ms Lee, the flat trend line may also reflect the already released buying power in the property market and related sectors like home decorations/furnitures etc in the past few months. “With the summer holidays fast approaching and the impending opening of DisneyLand, consumers’ positive spending desires should continue in the next quarters,” Ms Lee added.
Topping the shopping list of almost a third of Hong Kong people was “Furniture”, followed by “Plasma/LCD TVs” (21%) and Desktop/notebook PC (13%).
Taking all things into considerations, Hong Kong people’s confidence about the future of Hong Kong continued to rise for three consecutive rounds and hit 89, up from 86 in January (See Chart 5).
About ACNielsen
ACNielsen, a VNU business, is the world's leading marketing information provider. Offering services in more than 100 countries, the unit provides measurement and analysis of marketplace dynamics and consumer attitudes and behavior. Clients rely on ACNielsen's market research, proprietary products, analytical tools and professional service to understand competitive performance, to uncover new opportunities and to raise the profitability of their marketing and sales campaigns.
ACNielsen is part of the VNU Marketing Information group. VNU is a global information and media company with leading market positions and recognized brands in marketing information (ACNielsen), media measurement and information (Nielsen Media Research) and business information (Billboard, The Hollywood Reporter, Computing, Intermediair). VNU is active in more than 100 countries, with headquarters in Haarlem, the Netherlands and New York, USA. The company employs 38,000 people. Total revenues amounted to EUR 3.8 billion in 2004. VNU is listed on the Euronext Amsterdam (ASE: VNU) stock exchange. For more information, please visit the VNU website at www.vnu.com.
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