China’s retail sales growth plunged in August, impeding economic recovery

Both industrial production and fixed-asset investments growth in August also fell short of expectations, pointing to more softening in the economy.

Retail sales, a key measurement of consumer spending in the world’s most populous nation, grew by a mere 2.5 per cent in August compared with a year earlier, way down from the 8.5 per cent increase in July, and much lower than the projection for a rise of 7 per cent estimated in the Bloomberg survey.

Industrial production, a gauge of activity in the manufacturing, mining and utilities sectors, grew by 5.3 per cent in August from a year earlier after a 6.4 per cent gain in July. August’s figure was lower than the median forecast of the Bloomberg survey for a rise of 5.8 per cent.

Notably, revenue in the catering industry during August fell 4.5 per cent compared with a year earlier, marking a sharp reversal from the 14.3 per cent growth in sales in July.

“The hit to service activity from last month’s virus outbreak was even larger than we, and other forecasters, had anticipated,” said Julian Evans-Pritchard, senior China economist at Capital Economics. “The rest of the economy held up better, although the headwinds facing the property sector appear to be intensifying.”

Fixed-asset investment – a gauge of expenditures on items including infrastructure, property, machinery and equipment – rose 8.9 per cent in the January-August period, compared with a year earlier. This was lower the median of the Bloomberg survey, which called for a rise of 9 per cent. For the January-July period, fixed-asset investment had been up by 10.3 per cent.

The surveyed jobless rate, an imperfect measurement of unemployment in China that does not include figures for the tens of millions of the nation’s migrant workers, stood at 5.1 per cent in August, unchanged from July.