"Cannot Be Certain of Continued Growth"
China's retail sales in May grew by 6.4% year-on-year, surpassing expectations. Industrial production increased by 5.8%, falling short of forecasts.
According to the National Bureau of Statistics of China on June 16, retail sales in May rose by 6.4% compared to the same month last year, significantly exceeding the Reuters market forecast of 5.0%.
This marks the highest growth rate since December 2023. In April, retail sales had increased by 5.1% year-on-year.
Although unexpectedly strong consumer spending may provide some relief to policymakers, economists warn that this may not indicate a fundamental shift in consumer sentiment.
Zhiwei Zhang, CEO and Chief Economist at Pinpoint Asset Management, said, "The increase in retail sales was unexpected," but also noted that falling real estate prices could dampen consumer sentiment.
Bloomberg pointed out that the early start of shopping festivals may have contributed to the rise in retail sales. The "6.18 Shopping Festival," known as the "second Singles' Day," began in late May last year, but this year it started around mid-May. Michelle Lam, Greater China Economist at Societe Generale, stated, "Retail sales in May saw a significant increase, supported by the Labor Day holiday, consumption subsidies, and the early start of the 6.18 Shopping Festival." She added, "However, given the weak housing price indicators and the diminishing effect of subsidies, it is uncertain whether this growth trend will continue."
On the other hand, industrial production in May increased by 5.8% year-on-year, falling short of the Reuters forecast of 5.9%.
Fixed asset investment, which reflects capital investment changes in factories, roads, power grids, and real estate excluding rural areas, rose by 3.7% year-on-year from January to May, below the market forecast of 3.9%.
From January to May, real estate development investment declined by 10.7% compared to the same period last year, indicating that the real estate market downturn continues.
In May, profits of enterprises above a designated size (annual sales of 20 million yuan or more) increased by 5.8% year-on-year.
The national urban unemployment rate in May averaged 5.0%, down 0.1 percentage point from the previous month. The average urban unemployment rate from January to May was 5.2%.
According to calculations by Reuters based on data released by the National Bureau of Statistics, new home prices in May fell by 0.2% compared to the previous month. Reuters noted that the ongoing stagnation in the real estate market has continued since May 2023.
Compared to the same month last year, new home prices in May fell by 3.5%. The rate of decline narrowed compared to April, when prices fell by 4.0%.
The National Bureau of Statistics stated, "Overall, in May, the continued effects of various policy combinations promoted economic stability and development," but also noted, "At the same time, there remain many external instabilities and uncertainties, and the internal momentum to expand domestic demand needs to be further strengthened."
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