China’s retail sales beat expectations in May, climbing 3.7% compared with a year ago. The retail sales of China beat expectations of a 3% rise thanks to holiday boost. However China’s May industrial output lagged expectations and a slowdown in the property sector showed no signs of easing, adding pressure on Beijing to shore up growth. These sectors missed forecasts of .
The flurry of China’s economic data on Monday was largely downbeat, underscoring a bumpy recovery for the world’s second-largest economy.
China’s industrial output growth
China’s industrial output grew by 5.6% year-on-year, compared to the 6% increase expected, while fixed asset investment rose 4% compared to last May, just shy of the 4.2% forecast.
Retail sales of China
China’s retail sales, a gauge of consumption, in May rose 3.7% on year. This rise in retail sales was, accelerating from a 2.3% rise in April and marking the quickest growth since February. Analysts had expected a 3.0% expansion due to a five-day public holiday earlier in the month.
The country’s National Bureau of Statistics elaborated that the total retail sales of consumer goods in China reached 3.92 trillion yuan ($540.32 billion), with sales in urban areas up 3.7% year on year and sales in rural areas climbing by 4.1%.
Drop in real estate
On the other hand, the miss in fixed asset investment was dragged by a steeper drop in real estate investment. NBS said that excluding real estate, total fixed asset investment was 8.6% higher compared to last May.
Separately, the urban unemployment rate held steady at 5% in May, unchanged from April, and 0.2 percentage points lower than that of May last year.
China’s economy grew a faster-than-expected 5.3% in the first quarter, but analysts say the government’s annual growth target of around 5% is ambitious as the property sector remains in the doldrums.
Property investment fell 10.1% year-on-year in January-May, deepening from a decline of 9.8% in January-April.
New home prices slipped 0.7% in May from April, marking the 11th straight month-on-month decline and steepest drop since October 2014, according to Reuters calculations based on NBS data.
Export and loan data
China’s exports have held up, growing by 7.6% year-on-year in May in U.S. dollar terms, beating the Reuters’ forecast for a 6% increase. But imports missed expectations, rising by 1.8% during that time.
Loan data released Friday pointed to continued lackluster demand. Outstanding yuan loans rose by 9.3% in May from a year ago, the slowest increase on record since 1978, according to Wind Information.
M1 money supply, which includes cash in circulation and demand deposits, fell by 4.2% year-on-year in May, the most on record since 1986, according to Wind Information.
Goldman Sachs analysts pointed out that a state media outlet affiliated with China’s central bank attributed the slowdown in M1 growth to a crackdown on fake loans and outflows related to wealth management products.
Inflation data for May previously showed that consumer prices, excluding food and energy, rose by 0.6% from a year ago.
Imbalance in growth
Zhiwei Zhang, chief economist at Pinpoint Asset Management, said the imbalance “may be partly driven by the fact that there are two more working days in April this year compared to last year, while the working days in May this year and last year are the same”.
Policy easing measures in the housing sector have not yet boosted demand from home buyers on the national level, he added.
“Exports drove industrial growth and manufacturing investment significantly, but real estate weakness still hit household consumption and investment,” said ZhaoPeng Xing, senior China strategist at ANZ.
Stock update
Asian share markets were mostly softer following the mixed China data with Chinese blue chips slipping 0.2%.
