Consumer Pulse Q4 2022

Hong Kong consumer finances holding steady: Household incomes remained relatively stable in Q4 2022, possibly buoyed by easing quarantine policies, continued labour market improvement and distribution of consumption vouchers. Most (79%) respondents stated same or increased incomes in the past three months, and more of the same is anticipated as 78% of respondents reported expecting unchanged or higher income in the next 12 months. Both numbers remained unchanged from Q3 2022.

Consumers reported increased optimism about their future household finances as  previously neutral respondents became optimistic in this survey. Specifically, 36% of respondents reported being optimistic, up from 32% in the last two survey periods. Meanwhile, respondents holding neutral views decreased to 34% from 38% in the last quarter, with percentage of pessimistic respondents unchanged at 30%. Positive consumer sentiment is critical to sustained consumption and economic activities.  Increased optimism was reported among all generations except Baby Boomers.

Credit product interest shifts: Consumer interest in credit products shifted away from credit cards to personal loans and revolving lines. Among those who planned to apply for new credit in the next year, refinancing personal loans or applying for or refinancing revolving lines increased 18 percentage points (p.p.). Coming with the increased interests in personal loans and revolving lines was a six p.p. decrease (51%, down from 57%) in respondents intending to apply for credit cards.

BNPL use rose with increase retail spending: Buy now, pay later (BNPL) gained remarkable traction; 48% of respondents said they used BNPL services at least once in the past year, representing a whopping 14 p.p. of growth from the last survey. The increased popularity  of BNPL was likely driven by the gradual reopening of the economy, and reviving consumption activities as 49% of respondents reported using these services in a  physical retail store vs. 45% last quarter.