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City consumer confidence rebounding

SHANGHAI'S consumer confidence in the second quarter expanded into positive territory after two quarters in the negative, reflecting improving economic situations in the city, a report said today.

The Shanghai Consumer Confidence Index hit 111.2 points in the second quarter, up 12.3 points from the previous quarter, said the quarterly report by the Shanghai University of Finance and Economics.

An index reading above 100 points indicates consumers are positive about the economy.

"The big rise in the index comes as a result of the fact that the stimulus measures are gaining traction. The city's macroeconomy has shown positive signs which lifts consumers' confidence," said Xu Guoxiang, the research program leader and director of the university's Applied Statistics Research Center.

As an index reflecting future tendencies, it implied that Shanghai's economy had touched the bottom in the first quarter, Xu said.

Shanghai's economic growth tailed off to 3.1 percent in the first quarter after posting a 9.7 percent gain in 2008, its first single-digit growth in 17 years.

Shanghai consumers showed more willingness to buy durables such as homes and vehicles in the second quarter.

The number of people who considered it a good time to buy homes reached the highest level since the research began in the second quarter of 2007. Its index climbed 10.8 points from a quarter earlier to 66.6 points in the second quarter.

The number of people who thought it a bargain time to buy cars also hit an all-time high with the index rose 12.8 points from the previous quarter to 100 points.

However, the index measuring people's willingness to buy homes in the next six months dropped 2.2 points from the previous quarter to 75.4 points.

"It reflects the fluctuation of home prices that can easily affect the sentiment of home buyers," Xu said.

Shanghai's property market has seen a short period of price-cutting in the first quarter which stimulated the enthusiasm of potential home buyers. However, the price of properties has recovered in recent months after booming demand lifted prices.

People had more interest in buying new cars partly because of the reduced sales tax on smaller cars and the subsidies provided by the government to encourage people to upgrade older cars for more environmentally-friendly models.

The survey interviewed more than 1,000 consumers aged 20 to 69 about their attitudes to the city's economic prospects, their incomes and their investment and purchasing intentions.


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