China: Retail sales growth loses pace in December
January 18, 2021
Retail sales grew 4.6% year-on-year in December (November: +5.0% yoy), with the loss of momentum likely partly due to extremely cold weather. Looking at subsectors, car sales growth slowed markedly in December, while catering services gained momentum.
On a monthly basis, retail sales increased 1.2% in seasonally-adjusted terms in December, which was below November’s 1.6% expansion. Meanwhile, the trend pointed down, with the annual average variation of retail sales coming in at minus 4.4% in December, down from November's minus 4.1%.
Retail sales data suggests the recovery in private spending significantly lagged the rebound in industrial production last year, as consumers stayed cautious for many months following the harsh lockdown in Q1. Regarding the near-term outlook, analysts at Nomura commented:
“We expect the sequential recovery momentum in retail sales, especially catering services, to weaken sequentially in Q1, due to the widespread resurgence of Covid-19 across North China and the ensuing tightening in social distancing rules, while an extremely low base in January–February 2020 (-20.5% y-o-y) due to the Covid-19 outbreak and stringent lockdown measures in early 2020 could still significantly boost the year-on-year growth of retail sales in coming months.”