In the second half of February 2009, the PBC conducted a survey on urban depositors in 50 large, medium and small-sized cities across the country. 20,000 valid responses were received. The survey findings are as follows:
1.Current income sentiment index showed a downward trend. Income expectations remained pessimistic.
According to the survey, in the first quarter, urban residents sentiment index for current income registered 11.3%, rebounding slightly quarter on quarter but falling 18.1 percentage points year on year. Excluding seasonal factors, the index was still on the downward trend, sliding 21.2 percentage points altogether in seven consecutive quarters.
The future income confidence index stood at 17.7%, 4.5 percentage points higher than the previous quarter but 5 percentage points lower than the same period last year. As much as 19% of respondents expected their income to fall or considered it hard to predict, a sign of strong uncertainty still on future income.
2. Residents acceptance of current prices continued to improve. Inflation expectations weakened.
As the survey revealed, 66.4% of respondents considered current prices high but still acceptable. Those who reported that prices were too high to be accepted accounted for 26.1%, down 23.1 percentage points from the record high at the beginning of 2008, almost to the 2004-2006 level. As a result, the satisfaction index for current prices rebounded dramatically to -18.5%, up 8.4 percentage points from the previous quarter.
The share of respondents who expected price rise continued to shrink and inflation expectations weakened. According to the survey, 26.1% of respondents expected prices to rise in the next quarter, the lowest level since 2004, down 2.3 percentage points quarter on quarter and 22.8 percentage points year on year. 55.3% of respondents predicted that prices would remain unchanged. This proportion fell 6.1 percentage points from the previous quarter, indicating that inflation expectations subsided considerably.
3.Deposit preference dropped distinctly while preference for consumption and investment rebounded.
According to the survey, the once rising deposit preference recorded a visible fall this quarter while preference for consumption and investment rebounded. 64.5% of respondents viewed current deposit rates as low. As a result, only 37.5% found making bank deposits most desirable, down 7.3 percentage points from the end of last year.
By contrast, respondents who considered consumption most desirable took up 29.6%, up 3.5 percentage points from the previous quarter but down 7.3 percentage points from the same period last year. The percentage of respondents who preferred investment, including purchases of treasury bonds, shares and insurance, bounced back to 32.
9%. In particular, as much as 13.8% of respondents considered share purchase most desirable, rising 5.1 percentage points quarter on quarter, a rebound for the second consecutive quarter.
