China's retail sales declined for the first time since 2022 on subdued domestic demand, and fixed asset investment logged a sharper-than-expected fall, while industrial production remained a bright spot, official data revealed on Tuesday.
Retail sales decreased 0.6% from a year ago in May, the National Bureau of Statistics reported. This marked a reversal from the 0.2% increase in April and sharper the expected 0.3% decline.
Meanwhile, annual growth in industrial production accelerated more than forecast to 4.5% from 4.1% in April. Production was forecast to grow 4.4%.
During January to May period, fixed asset investment declined 4.1% from the same period last year, bigger than the expected decrease of 2.3%. At the same time, property investment plunged 16.2%.
In May, the urban unemployment rate posted 5.1% compared to 5.2% in the prior month.
Disappointing retail sales data came as Beijing targets domestic demand as a growth engine, shifting away from export-driven growth.
ING economist Lynn Song said today's domestic data could add to pressure on government for fresh stimulus.
Song said it remains too early to confidently call a bottom for the property market, as prices continue to decline, and inventory levels remain high. The property sector will remain a major drag on growth for some time.
Despite internal headwinds, robust exports are keeping overall growth on track, allowing policymakers to delay stimulus and tolerate a two-speed economy for now, Commerzbank Senior Economist Henry Hao, said.
In the first quarter, the economy expanded at a faster pace of 5.0% after rising 4.5% in the preceding period. The government aims to achieve 4.5-5.0% GDP growth this year.
The International Monetary Fund forecast China's economy to grow 4.4% this year and 4.0% in 2027.
