Retail sales rose just 2.5 percent in August year-on-year, far below economists’ forecasts of a 7 percent rise, and the slowest increase in 12 months.
Industrial production, which was one of the main engines behind China’s world-beating recovery in 2020, also missed targets to add 5-3 percent, official data showed on Wednesday.
The figures add to mounting concerns over a loss of momentum across China’s economy, with the recent flooding, regulatory interventions, new coronavirus infections, and a property slowdown driving down growth expectations.
Consumer activity, which has lagged behind the country’s wider recovery over the course of the pandemic as households remained cautious, was hit hard by the disruption. Retail sales of catering and restaurants dropped 4-5 percent, the first contraction since November 2020, HSBC analysts noted.
“It’s proven more challenging than expected to boost retail sales post-Covid,” said Carlos Casanova, senior economist at UBP.
Recommended Outbreaks of the coronavirus in recent months, originally centered around cases of the Delta variant of Covid-19 in Nanjing in July, have curbed travel and consumption after authorities imposed preventive measures.
“Insofar as China maintains a zero-tolerance policy towards Covid-19, that leaves their economy vulnerable to any potential local outbreaks because they will have to shut down,” added Casanova. “That will translate into declines in consumption and supply chain disruptions”.