Shoppers carrying their new purchases walk past dresses on sale in a department store in Causeway Bay, Hong Kong, recently. Bloomberg News

HONG KONG: Consumers in the city are becoming more optimistic about the outlook for the local economy and feeling more confident about spending, according to the findings of two surveys.

Over 50 percent of respondents believe that the Hong Kong economy will improve over the next 12 months, a survey by local policy think tank Bauhinia Foundation Research revealed.

Half of the interviewees also believe that the employment situation in the city will improve over the period.

"Our survey findings indicate that there is a gradual revival of confidence in Hong Kong's economy. The consensus seems to be that we will see improvements in our employment situation in the coming year," said Anthony Wu Ting-yuk, chairman of the think tank.

"We are stepping out of the trough. Consumer confidence is an essential element to boost the economy, which is very likely to be followed by actual consumption. I believe the figures will be more favorable when we conduct this survey next time."

Another survey conducted by the City University of Hong Kong (CityU) showed that consumer confidence has climbed for two consecutive quarters.

The reading of the CityU consumer confidence index inched up 8.7 points to 87.5 in the second quarter from the first quarter, indicating that people are becoming more optimistic about the economic outlook for the coming quarter.

However, the reading has remained below the positive territory threshold of 100 for four consecutive quarters.

"The rising index reveals consumer sentiment in Hong Kong is still at a relatively low level but has been improving, indicating Hong Kong people are stepping out of the shadow of the financial meltdown," said Dr Geoffrey Tso, an associate professor at CityU's Department of Management Science.

Economists attributed the improved confidence to the strong rally in the local financial markets recently.

"The strong rebound in the equity and property markets is a shot in the arm for the Hong Kong economy," said Irina Fan, a senior economist at Hang Seng Bank.

"The stock market has rebounded over 60 percent from (its low in) the last quarter. This helped boost citizens' wealth as well as their appetite to spend," she said.

The economist also cited the strong rally in the local property market. Property prices have rebounded more than 10 percent from their lows at the end of last year.

"Domestic demand in Asia including Hong Kong remains strong despite dismal exports as consumers believe that the worst for the economy has passed," said Frances Cheung, an economist at Standard Chartered Bank.

The Bauhinia Foundation survey also showed stronger confidence in the outlook for household income.

Some 20 percent of respondents forecast that their household income would increase next year while over 10 percent anticipated higher household earnings over the next three months.

On consumption of daily necessities, about 10 percent of respondents said their household increased spending over the past three months while the percentage of those who expected to spend less in the coming three months declined about 10 percentage points compared with that of the previous three months.

Local residents, however, remain somewhat cautious on investment and spending on luxury items, Wu said.

The CityU survey also found that consumers are most confident about the prospects for their living standards, scoring 100 points-the only category to reach the positive territory threshold.

Consumers are least confident about employment, scoring only 74.8 points despite a big improvement from 56.5 points previously.

(HK Edition 07/17/2009 page3)