China Consumption Monthly Roundup | June 2023 Chartbook

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

Insights for What’s Ahead:

The consumption recovery remains sluggish and uneven. Offline and online retail sales continued growing at double digit rates y-o-y in May, but this was driven by the very low base last year, and growth was slower when compared to April. Yet, on a m-o-m basis, growth in retail sales bounced back to positive territory. Spending on consumer services continued experiencing robust growth, helped by a strong rebound in travel related spending during the May holidays. Looking at consumer spending on big-ticket items, passenger car sales improved in May, but sales of new residential housing floor space continued to weaken. Meanwhile, household savings continue to grow.

Looking ahead, the fundamentals, as we have laid them out before, remain unchanged: a sustained pick-up in consumer spending necessitates a significant improvement in consumer confidence levels. This, in turn depends on labor market improvements, thus improved household income, and on the stabilization of the property sector. However, the property market continues facing significant challenges, and so far, there are no strong signs that labor market weakness is easing meaningfully. Hiring intentions are mixed but are generally slowing. Job creation is picking up modestly, but remains well below pre-COVID levels, while unemployment among 16 to 24-year-olds continues to worsen, climbing to a record high of 20.8 percent in May.