China Retail Sales Decline For First Time Since 2022

(RTTNews) - China's retail sales declined for the first time since 2022 on subdued domestic demand, and fixed asset investment logged a sharper-than-expected fall, while industrial production remained a bright spot, official data revealed Tuesday.

Retail sales decreased 0.6 percent from a year ago in May, the National Bureau of Statistics reported. This marked a reversal from the 0.2 percent increase in April and sharper the expected 0.3 percent decline.

Meanwhile, annual growth in industrial production accelerated more than forecast to 4.5 percent from 4.1 percent in April. Production was forecast to grow 4.4 percent.

During January to May period, fixed asset investment declined 4.1 percent from the same period last year, bigger than the expected decrease of 2.3 percent. At the same time, property investment plunged 16.2 percent.

In May, the urban unemployment rate posted 5.1 percent compared to 5.2 percent in the prior month.

Disappointing retail sales data came as Beijing targets domestic demand as a growth engine, shifting away from export-driven growth.

ING economist Lynn Song said today's domestic data could add to pressure on government for fresh stimulus. Song said it remains too early to confidently call a bottom for the property market, as prices continue to decline, and inventory levels remain high. The property sector will remain a major drag on growth for some time.

Despite internal headwinds, robust exports are keeping overall growth on track, allowing policymakers to delay stimulus and tolerate a two-speed economy for now, Commerzbank Senior Economist Henry Hao, said.

In the first quarter, the economy expanded at a faster pace of 5.0 percent after rising 4.5 percent in the preceding period. The government aims to achieve 4.5-5.0 percent GDP growth this year.

The International Monetary Fund forecast China's economy to grow 4.4 percent this year and 4.0 percent in 2027.