China's May Consumption Still in Negative Territory (Comprehensive)

Retail Sales Down 6.7%, Decline Slows but Recession Continues
Industrial Production Barely Turns Positive... Unemployment Rate Still Above 5%

[Asia Economy Beijing=Special Correspondent Jo Young-shin] China's retail sales (domestic demand), which had plummeted due to lockdowns in major cities such as Shanghai, have rebounded. However, they still show a negative trend, indicating that it may take some time to return to normal.

On the 15th, the National Bureau of Statistics of China announced that retail sales in China in May decreased by 6.7% year-on-year. The bureau explained that the total sales of consumer goods in May amounted to 3.3547 trillion yuan. Excluding automobiles, which require a large sum of money, the sales of consumer goods decreased by 5.6% year-on-year to 3.0361 trillion yuan, the bureau added.

Source: National Bureau of Statistics of China

Accordingly, the cumulative retail sales in China from January to May over five months were recorded at 17.1689 trillion yuan, down 1.5% compared to the same period last year.

China's retail sales in April had sharply declined by as much as 11.1% year-on-year.

Last month, retail sales in both urban and rural areas rebounded but did not escape the negative zone. Urban retail sales in May amounted to 2.9205 trillion yuan, down 6.7% year-on-year, while rural retail sales fell 6.3% to 434.2 billion yuan.

As in the previous month, all surveyed items except food and beverages, alcohol and tobacco, pharmaceuticals, and petroleum products recorded negative growth. Clothing and footwear, cosmetics, home appliances, and furniture all experienced double-digit declines.

Automobile sales, which had recorded a negative 31.6% in April, showed signs of recovery last month with a negative 16.0%. The cumulative automobile sales over five months recorded a negative 9.9% year-on-year.

Due to lockdown measures, the food service industry, including restaurants, fell sharply by 21.1% year-on-year.

Source: National Bureau of Statistics of China

Industrial production turned positive. China's industrial production in May increased by 0.7% year-on-year. In April, industrial production had decreased by 2.9%. The easing of lockdowns appears to have contributed to the shift to positive industrial production.

Fixed asset investment, which reflects infrastructure investment and private equipment investment from January to May, increased by 6.2% year-on-year. This is a slowdown compared to 6.8% in the previous month. Although the Chinese leadership has instructed to promote infrastructure investment through bond issuance, the atmosphere remains constrained by lockdowns.

By industry, primary industry investment increased by 5.8% year-on-year, secondary industry investment rose by 11.0%, and tertiary industry investment grew by 4.1%.

By region, investment in the eastern region increased by 5.0% year-on-year, central region by 10.9%, western region by 7.9%, and northeastern region by 4.4%, indicating that infrastructure investment was relatively active in China's central region.

Source: National Bureau of Statistics of China

The National Bureau of Statistics explained that despite the severe situation of a complex international environment and domestic COVID-19 spread, industrial production in May shifted from negative to positive, showing signs of economic recovery.

Regarding employment issues, the bureau added that the urban unemployment rate in May was 5.9%, down 0.2 percentage points from the previous month. However, the unemployment rate among youth aged 24 and under remained high at 18.4%.

Although key indicators such as China's retail sales, industrial production, and fixed asset investment improved compared to April, they are still considered below expectations. If the current situation continues, the second quarter (April to June) gross domestic product (GDP) is also expected to receive a disappointing report card.

Meanwhile, Chinese media report that domestic demand in China is gaining momentum as the June 6·18 (June 1 to June 18) shopping event begins. The 6·18 event is considered one of China's two major online shopping discount events alongside the Guanggunjie (11·11).

This content was produced with the assistance of AI translation services.