A huge waiting line can be seen in front of a jewellery retailer at Yu Garden in Shanghai, China on May 17, 2025, as the city offers consumer vouchers to stimulate consumer spending.
nuphoto | nuphoto | Getty Images
Retail sales in China increased at the fastest speed since late 2023 in May. Data from the National Bureau of Statistics was supported on Monday on extended Labor Day and Dragon Boat Holidays.
Retail sales last month rose 6.4% from the previous year, growing 5% in Reuters polls, sharply beating analyst estimates that accelerated from the previous month’s 5.1% growth.
The increase in industrial production slowed from 6.1% in the previous month to 5.8% in May from the previous year. The latest reading was slightly weaker than analysts’ expectations for a 5.9% rise.
Quarterly reported fixed assets investments grew 3.7% from the previous year, forecasting Reuters’ forecasts of 3.9%, slowing from 4% growth in the first four months.
Among fixed asset investments, real estate investments have deepened, falling 10.7% in the first five months, government data shows.
The unemployment rate based on the May city survey was 5.0%, relaxing from 5.1% in April to the lowest level since last November.
“The increase in retail sales has been a surprise,” said Zhiwei Zhang, president and chief economist at PinPoint Asset Management, adding that a decline in real estate prices could weaken consumer sentiment.
Another release by NBS on Monday saw prices for new homes in wealthier Tier 1 cities continue to decline, falling 1.7% in May from a year ago, while prices for Tier 2 and Tier 3 cities fell 3.5% and 4.9% respectively.
The tariff contracts reached by Beijing and Washington in mid-May provided temporary relief to the country’s exports, prompting some companies to frontload shipments while doubling them in alternative markets. Both sides struck a 90-day ceasefire in early April to roll back most of the triple girders taxation added to each other’s goods.
Commerce Secretary Howard Lutnick told CNBC last week that US tariffs on Chinese imports would remain at the current 55% level.
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China’s exports were lower than expected in May, but a surge in shipments to Southeast Asian countries, the European Union countries and Africa offset a sharp decline in US goods. Exports to the US to China have plummeted more than 34%, from its most sharp decline since February 2020.
Trade data over the past two months showed China’s export resilience, as China’s export resilience highlighted “the difficulty of bilateral tariffs to significantly reduce China’s total exports,” according to Goldman Sachs.
A more pressing issue for Chinese policymakers has led to slowing domestic demand. Consumer prices have been falling year-on-year for the fourth consecutive month, falling 0.1% in May. Deflation in factory gates or producer prices has also deepened, with a 3.3% decline from a year ago.
However, Beijing may feel less urgent when rolling out additional mitigation steps, as exports are more resilient than expected and GDP growth appears to be on track at over 5% in the first six months, Goldman said.
