Mixed picture for mid-Autumn consumption
Household spending and travel is finally starting to push back above pre-pandemic levels in China, even as growth rates remain subdued, at least compared to 2019.
- That's according to the latest data on tourism and spending for last week's October holiday.
The latest: On Friday evening, the Ministry of Culture and Tourism released travel and expenditure data for the Mid-Autumn and National Day holidays (September 29 through October 6).
Compared to last year, spending was way up (Gov.cn 1):
- 826 million tourists traveled domestically – up 71.3% from 2022 levels.
- Domestic tourism revenue was RMB 753.43 billion – up 129.5% from last year.
The numbers even saw growth compared to pre-pandemic levels, although the results were, of course, much less impressive:
- The number of domestic travelers was up 4.1% from 2019.
- Domestic tourism revenue was up just 1.5%.
Do the math: Adjusting for inflation, and accounting for the greater number of tourists, expenditure per person was significantly below 2019 levels.
- Our take: Subdued per-capita spending suggests consumer confidence remains quite fragile.
The good: Getting overall travel and spending back above the levels seen previous to the pandemic – even if only slightly – is a win for officials.
The bad: That said, what policymakers are really hoping for is to get growth rates back to the same heights seen in 2019 – which typically were closer to the high single digits for various consumption metrics.
- The issue: That may not happen for years, if ever.
- But for now, even slight growth compared to 2019 is positive.
The uncertain: Meanwhile, positive base effects from a terrible Q4 2022 will push up y/y growth rates across the econ data through the end of the year.
- This will make it more difficult to suss out the true underlying momentum of economic growth over the next couple of months.
The bottom line: Despite these upcoming distortions in the Q4 data, the coming months will be critical in determining whether households are starting to regain confidence and are finally helping contribute to a budding economic recovery.
- But so far, the picture remains mixed.