CHINESE retail sales jumped last month, data showed today, beating expectations and fuelling hopes that the country’s army of consumers are returning to help kickstart the world’s number two economy after an extended period of weakness.

The data, which also revealed a better-than-expected lift in industrial output, is the latest pointing to a stabilisation and will follow a number of stimulus measures by Beijing.

Sluggish domestic consumption, an embattled property sector and soft overseas demand for China’s exports have all complicated the country’s post-Covid recovery after the lifting of restrictions at the end of last year. 

Retail sales – the main indicator of household consumption that is closely followed by markets – jumped 4.6% on-year in August, the National Bureau of Statistics said.

That marks a big improvement on July’s 2.5% and was far better than the 3% forecast in a survey of economists by Bloomberg. 

Meanwhile, industrial production climbed 4.5% on-year, which was also a big increase from July and more than estimated.

The government in recent weeks announced a series of measures to lift the economy, the latest coming yesterday with the People’s Bank of China cutting the amount of cash lenders need to keep in reserve – a move aimed at freeing up cash for loans.

Authorities have also unveiled tax breaks for households and businesses to support consumption, while taking steps to address the crisis in the crucial property sector. 

Several major cities, including Beijing and Shanghai, have relaxed their criteria for mortgage loans, while first-time buyers have been granted renegotiation of their loan rates. 

However, while today’s data were welcome, there were some figures highlighting the struggles ahead.

Property prices fell again last month, suggesting the government’s measures were yet to have an effect, and today Sino-Ocean, a state-backed developer, announced it would suspend payments of offshore debts, the latest company to show signs of trouble.

The unemployment rate for the working population as a whole fell slightly in August to 5.2%.  

Unemployment data no longer include a breakdown for 16-24 year-olds, after a record high in June of 21.3%. 

In China, the unemployment rate is calculated for urban areas only, and therefore gives only a partial picture of the situation. 

Fixed capital investment, meanwhile, slowed to 3.2% on-year in the first eight months of the year. 

That marks the fourth month of decline for the indicator, which reflects spending on property, infrastructure, equipment and machinery – sectors that the government has relied on in the past to stimulate activity. – AFP, September 15, 2023.