China's May retail sales up 6.4%...Partial recovery in consumer sentiment after tariff truce

Largest increase since December 2023

May industrial production growth fell short of expectations with a 5.8% YoY rise

China's key consumption indicator, retail sales, increased by 6.4% in May, indicating a revival in domestic demand. This is a significant improvement over April's 5.1% growth rate.

According to data released by China's National Bureau of Statistics on the 16th (local time), retail sales in May rose by 6.4%, substantially surpassing April's 5.1% gain.

This marks the largest increase since December 2023. Analysts had expected May retail sales to rise by 5.0%.

However, industrial output in May rose by 5.8% year-over-year, a slowdown from April's 6.1% increase. This figure was below economists' forecast of a 5.9% rise compiled by Reuters and is the lowest growth rate since November last year.

Fixed-asset investment grew by 3.7% in the first five months of this year compared to the same period last year, falling short of the anticipated 3.9% increase. From January to April, the growth rate was 4.0%.

The robust retail sales figures are seen as a partial recovery in consumer sentiment following a US-China tariff truce that eased trade war concerns. Other contributing factors were the advancement of JD.com's '618 Shopping Festival' from June to May and government compensation sales policies boosting demand.

Goldman Sachs described the data as "better than feared," while ING Economics called it "mixed." The Chinese government’s official GDP growth forecast for this year remains at 5%, but the consensus stands at about 4.5%.

Contributing Reporter Jungah Kim kja@hankyung.com