China retail sales, industrial output, fixed asset investment in May

China’s retail sales saw a significant surge in May, marking the fastest growth rate since late 2023. The National Bureau of Statistics reported that retail sales for the month jumped by 6.4% compared to the previous year, surpassing analysts’ expectations. This growth was attributed to the extended Labor Day and Dragon Boat holidays, which boosted consumer spending.

On the other hand, industrial output growth slowed to 5.8% year-on-year in May from 6.1% in the prior month. Despite this slight dip, it was still in line with analysts’ forecasts. Additionally, fixed-asset investment expanded by 3.7% year-to-date as of May, falling short of expectations. Notably, property investment saw a significant contraction, dropping by 10.7% in the first five months of the year.

The urban survey-based unemployment rate in May improved to 5.0%, down from 5.1% in April. This positive trend was welcomed by experts, but concerns were raised about the potential impact of falling property prices on consumer sentiment.

A separate report by the National Bureau of Statistics revealed that prices of new homes in tier 1 cities continued to decline in May, while tier 2 and tier 3 cities also experienced price drops. The ongoing trade tensions between Beijing and Washington had a temporary impact on exports, prompting businesses to expedite shipments and explore alternative markets.

Despite the challenges posed by sluggish domestic demand and declining consumer prices, China’s exports showed resilience in May. Surging shipments to Southeast Asian nations, European Union countries, and Africa helped offset the decline in U.S.-bound goods. This resilience in exports, coupled with expected GDP growth exceeding 5% in the first half of the year, may reduce the urgency for additional easing measures by Chinese policymakers.

In conclusion, China’s economic landscape in May showcased a mix of positive and challenging indicators. While retail sales and exports demonstrated strength, concerns over property investment and domestic demand linger. It will be crucial for policymakers to carefully navigate these dynamics to ensure sustainable growth and stability in the coming months.