China Retail May 2018


China: Growth in retail sales slumps in May

June 14, 2018

Nominal retail sales grew 8.5% on an annual basis in May, moderating from the 9.4% expansion registered in April and contrasting market expectations of a 9.6% increase. The print marked the weakest growth since June 2003, excluding January and February data, which are distorted by the Lunar New Year holidays. The moderation was driven by a decline in car sales as well as weaker sales of foodstuff and clothing, footwear and accessories. Conversely, sales of petroleum and petroleum-related products accelerated in May on the back of higher oil prices.

On a seasonally-adjusted monthly basis, retail sales expanded 0.29% in May, halving the 0.60% increase in April. Annual average growth in retail sales fell from 10.1% in April to 9.9% in May.

Hong Liang, Chief Economist and Head of Research at CICC, and Eva Yi, Senior Economist at CICC, suggest that retail sales are on a downward trend:

“Although the mid-year (June 18) e-commerce sales and the date-shift of the dragon-boat festival (from late-May last year to mid-June this year) may have played a role, the trend in retail sales growth appears to be softening. Another contributing factor is that auto sales growth decelerated visibly -1.0% YoY in May ahead of the import tax cut. On the other hand, construction material sales growth also declined visibly, which may be a delayed reaction to slower property sales growth.”

FocusEconomics Consensus Forecast participants expect retail sales to increase 10.3% in 2018, which is down 0.2 percentage points from last month’s estimate. In 2019, the panel sees retail sales expanding 10.1%.


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China Retail Chart

China Retail May 2018

Note: Month-on-month changes of seasonally adjusted nominal retail sales index and year-on-year variation in %. Owing to seasonal factors related to the Lunar New Year, annual figures for January and February are reported together.
Source: National Bureau of Statistics of China (NBS) and FocusEconomics calculations.

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