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China consumer sentiment improves after October plunge

Tomohiro Ohsumi | Bloomberg | Getty Images

Consumer sentiment in China edged up in November from a record low, as confidence in the labor market improved and consumers became more confident about the prospects for business conditions, a survey showed Wednesday.

The Westpac MNI China Consumer Sentiment Indicator rose to 113.1 in November from 109.7 in October. Last month's reading marked the lowest since the survey began in 2007.

"Although we viewed last month's sharp drop as mainly an overdue correction bringing Chinese consumer confidence more in line with the softer tone coming from other economic data, there was a risk that sentiment could have gone on to register a deeper shock," said Matthew Hassan, a senior economist at Westpac.

"A timely easing in policy appears to have helped spur this month's rally," he said.

The People's Bank of China (PBoC) last month lowered its one-year benchmark lending rate by 25 basis points to 4.35 percent, to kick start an economy that grew at its slowest pace since the global financial crisis in the third quarter.

Respondents were optimistic about the outlook for their household finances, and buying conditions for large durable items turned slightly more favorable, although remaining weak. Survey participants were also expecting to increase their discretionary spending, particularly entertainment.

The survey is taken from consumers across 30 Chinese cities ranging from tier 1 to tier 3.

Labor market sentiment also improved, with the Employment Outlook Indicator snapping a three-month run of declines, although at 95.2, it stayed below the break-even level of 100.

China's housing market continued to cool, albeit from a high level, with the House Price Expectations index falling for the third month in a row. But consumers remained optimistic about taking part in the property market, the survey showed.