China Consumption Monthly Roundup | July 2023 Chartbook

Our Monthly Consumption Roundup tracks near-term consumption trends and underlying key drivers for China. Learn more about the key highlights for July.

Insights for What’s Ahead

• Retail sales growth moderated in June as household savings increased, indicating a cautious outlook among consumers. Consumer spending – including online, offline, in-person services, and goods sales – moderated in June (previous months’ y-o-y growth was pushed up by last year’s low comparison base, but this effect started to fade in June) and remains below pre-COVID levels. Meanwhile, household savings continued to grow, as consumers remain very cautious about what lies ahead. Consumer prices slowed to a 28-month low in June, further pointing to weak domestic demand.
• Looking ahead, the recovery in consumption is clearly losing momentum. While both household income and job creation increased y-o-y in June, neither have returned to pre-COVID levels. Hiring intentions were generally weak and youth unemployment continued to worsen, both worrying signs in terms of further household income increases. Moreover, the property sector continues on a downturn, dragging down confidence levels and weighing on private consumption.
• Against this backdrop, the July meeting of the Politburo of the Communist Party of China indicates that the government will continue rolling out supportive measures to boost domestic demand and stabilize the property sector. Whether these measures will be sufficient to improve market confidence is unclear. The limited effects of the most recent policy measures (e.g., rate cuts and the extension of financial support for property developers) in achieving this suggests that this will be a difficult endeavor.