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Cary Huang

Growth near 9-year high even with shorter May Day break
Mainland retail sales  shrugged off  last month's earthquake and shortened public holiday to grow at nearly the fastest pace in at least nine years, showing further signs  China could count on strong domestic spending to cushion a slowdown in exports.
Retail sales grew 21.6 per cent year on year in May,  slightly slower than  the 22 per cent rise in April, amid easing inflation and a  shortened Labour Day holiday, according to National Bureau of Statistics data  released yesterday.
Sales totalled 870.4 billion yuan (HK$985.47 billion),  more than April's 814.2 billion yuan. The April increase was the biggest since 1999, the first time monthly data in that category was collected.
The slight slowdown  stemmed largely  from an easing in the mainland's inflation rate to 7.7 per cent last month from 8.5 per cent in April.
Beijing's decision to  shorten the week-long Labour Day holiday to just  three days  this year, as well as  the Sichuan earthquake  that claimed more than 69,000 lives, also affected consumption.
Economists  expected consumer spending to remain strong, helping offset weakening global demand for mainland exports and government moves to curb investment growth.
Policymakers have been hoping to boost private consumption  to balance  growth from overly relying on exports and capital investment. Private consumption, exports and investment are the  three engines of the world's fourth largest economy.
Tim Condon, chief Asia economist  at ING, said the central bank's money and credit data  for May released on Thursday suggested an upside surprise from the retail sales data.
'Growth has been above 20 per cent since December [apart from Lunar New Year-affected February], some of which we attribute to the loosening of monetary conditions, from accelerating inflation and unchanged interest rates,' Mr Condon said.
Goldman Sachs economists Yu Song and Hong Liang said in real terms - or  adjusted for inflation - sales growth in May would be 12.9 per cent year on year,  the same as in April. On a quarter-on-quarter, seasonally adjusted and annualised basis, growth inched up to 23.4 per cent  from 21.6 per cent.
With softening inflation, it would not be surprising for nominal retail sales growth to slow, Goldman Sachs economists said.
'We expect real consumption to remain firm, supported by firm real wage income growth,' they said.
Mainland inflation rose at a much slower pace  last month on stabilising food prices, while the broad M2 measure of money supply accelerated to a faster than expected 18.1 per cent from 16.9 per cent in April.
Urban retail sales rose 22.3 per cent to 594.7 billion yuan and retail sales in rural areas grew 20.1 per cent to 275.7 billion yuan, the statistics bureau said in a statement posted on its website.
Sales of oil and related products  surged 42.5 per cent;   vehicles,  32 per cent; grain and edible oils,  27.6; meat, poultry and eggs,  25.4 per cent; and daily consumer goods,  18.1 per cent. In  January-May,  retail sales rose 21.1 per cent  year  on year to 4.24 trillion yuan.



Mainland retailers see sales jump 21.6pc despite quake