Real expenditure per capita during LNY flat on 2019 levels, but number of travelers surge

Household spending during the Lunar New Year (LNY) holiday suggests consumer confidence may gradually be returning.

Per the Ministry of Culture and Tourism, during the eight-day holiday (January 28 to February 4):

• 501 million people traveled domestically, up 5.9% y/y – and 20.7% higher than 2019 levels.
• Total tourism-related expenditure hit RMB 677 billion, up 7.0% y/y – and 31.7% higher than 2019.

That means per capita spending was up 9.1% compared to the 2019 break.

But, but, but: In real terms – stripping out price effects – per capita spending is flat relative to 2019 levels.

Let that sink in: Once accounting for inflation, the average consumer spent as much during this year’s LNY as they did six years ago – hardly a statistic to shout about.

Get smart: Despite real per capita expenditure remaining flat relative to pre-pandemic levels, we still feel pretty good about this year’s LNY data.

• The surge in domestic trips – up over 20% from 2019 – reflects a greater willingness from low-income households to travel during LNY. They spend less than the average traveler, dragging down per capita expenditure.
• But this isn’t a sign of weak consumer confidence – on the contrary. It tells us lower income-households are increasingly willing to spend on goods and services that were previously unaffordable.

The bottom line: With more low-income households traveling, per capita expenditure is less useful as a proxy for consumer confidence.

• A far more useful metric is the total number of travelers and total nominal expenditure – which both hit record highs this year.
• This suggests consumers are (slowly) getting their mojo back.