China’s Retail Sales Turn Negative for First Time in 3 Years and 5 Months in May... Industrial Production Rises 4.5%

China's retail sales in May turned negative for the first time in three years and five months. In contrast, industrial production increased at a rate exceeding forecasts, intensifying the imbalance between supply and demand.

According to China’s National Bureau of Statistics on June 16, retail sales in May decreased by 0.6% year-on-year.

Customers are purchasing vegetables at a supermarket in Wuhan, Hubei Province, China. Photo by Xinhua News Agency

This marks a reversal from a 0.2% increase in the previous month and is the first monthly decline since December 2022 (-1.8%), a span of three years and five months. It also fell short of the 0% forecast by experts surveyed by Reuters.

By region, sales of consumer goods in rural areas increased by 1.5%, while sales in urban areas decreased by 0.9%. In terms of consumption type, merchandise sales declined by 0.7% year-on-year, while restaurant sales increased by 0.6%.

In stark contrast to weak demand, industrial production grew by 4.5% year-on-year, surpassing both the previous month's 4.1% and the 4.3% forecast by Reuters experts.

By sector, manufacturing increased by 4.4%, mining by 2.3%, and electricity, heat, gas, and water production and supply by 7.6% year-on-year. Within manufacturing, high-tech output soared by 15.1% and equipment manufacturing by 9.5%.

By company type, state-owned enterprises rose by 3.7%, joint-stock companies by 5.2%, foreign-invested companies and those invested in by Hong Kong, Macao, and Taiwan by 1.9%, and private companies by 2.7%.

From January to May this year, fixed asset investment (excluding rural households) fell by 4.1% year-on-year, with the decline widening from the 1.6% drop seen from January to April. Real estate development investment dropped by 16.2% year-on-year, deepening from a 13.7% decrease in the first four months. Infrastructure investment increased by 0.6%, but manufacturing investment shrank by 0.4%.

China’s housing prices in May fell by 3.5% year-on-year, the same rate of decline as in the previous month (-3.5%).

The national urban unemployment rate in May stood at 5.1%, down slightly from 5.2% in the previous month.

Wang Guan-hua, spokesperson and director general of the Department of Comprehensive Statistics of the National Bureau of Statistics of China, stated, "Overall, the national economy operated smoothly in May, and its resilience continued to emerge." He added, "However, the external environment has become more complex and volatile, and domestically, the imbalance of strong supply and weak demand has become more pronounced, with some enterprises facing considerable operational pressure."

CNBC reported that while easing tensions in the Middle East is providing short-term relief, Chinese authorities are under pressure to introduce meaningful stimulus measures to boost consumption.

Zhang Zhiwei, President and Chief Economist of Pinpoint Asset Management, said, "The sluggish retail sales figures are putting pressure on the government to consider policy measures to stabilize consumption," adding, "I expect policy fine-tuning to take place in July after the announcement of second-quarter GDP."

This content was produced with the assistance of AI translation services.