China’s retail sales in May exceeded expectations, with a 3.7% increase compared to the previous year, surpassing the 3% rise predicted by economists in a Reuters poll. However, other economic indicators, such as industrial output and fixed asset investment, fell short of expectations. Industrial output grew by 5.6% year-on-year, below the 6% forecast, and fixed asset investment rose by 4%, slightly below the 4.2% predicted by the poll.
The National Bureau of Statistics reported that total retail sales of consumer goods in China reached 3.92 trillion yuan ($540.32 billion) in May. Urban retail sales were up 3.7% year-on-year, while rural sales increased by 4.1%. The miss in fixed asset investment was largely attributed to a decrease in real estate investment. Excluding real estate, total fixed asset investment showed an 8.6% increase compared to the previous year.
The urban unemployment rate remained steady at 5% in May, unchanged from April and lower than May of the previous year. China’s exports grew by 7.6% year-on-year in May in U.S. dollar terms, surpassing the Reuters’ forecast of a 6% increase. However, imports only rose by 1.8%, falling short of expectations. Loan data released in May showed muted demand, with outstanding yuan loans increasing by 9.3%, which is the slowest increase on record since 1978.
M1 money supply, which includes cash in circulation and demand deposits, saw a 4.2% decrease year-on-year in May, the largest decline since 1986. This drop was attributed to a crackdown on fake loans and outflows related to wealth management products. Inflation data for May showed that consumer prices, excluding food and energy, rose by 0.6% from the previous year. Goldman Sachs analysts noted that the slowdown in M1 growth was linked to the government’s efforts to address fake loans and capital outflows.
Overall, China’s economic performance in May showed mixed results with retail sales exceeding expectations, while industrial output and fixed asset investment fell short. The stability of the urban unemployment rate and the growth in exports were positive indicators, but the slowing loan growth and decline in M1 money supply raised concerns about weakening demand. The government’s crackdown on fake loans and efforts to manage capital outflows were highlighted as factors affecting the economic data.
