China retail sales strong in May, but output lags
China's retail sales figures in May, a major indicator of consumption sentiment, rose 3.7 percent year on year to 3.92 trillion yuan, accelerating from a 2.3 percent increase in April and marking the quickest rate of growth since February. Newly released data on Monday from the National Bureau of Statistics (NBS) also showed that retail sales climbed 4.1 percent year on year in the first five months of 2024, to hit 19.52 trillion yuan.  Analysts had expected retail sales to grow three percent due to the five-day public holiday earlier in the month. However, industrial output on the mainland lagged expectations with the property sector still weak.  Industrial data released by the NBS came in below expectations for a six percent increase, with output rising only 5.6 percent year on year in May. Fixed asset investment expanded four percent in the first five months of 2024 from the same period a year earlier, versus expectations for a 4.2 percent rise.  It grew 4.2 percent in the January to April period. The NBS also reported that China's raw coal output fell three percent year on year to 1.86 billion tonnes in the first five months of this year. In May alone, the country's raw coal output stood at 380 million tonnes, down 0.8 percent year on year, although the decline was 2.1 percentage points narrower than in April. Meanwhile, China's property market downturn, high local government debt and deflation remained heavy drags on economic activity.  The latest figures point to an uneven growth pattern that reinforced calls for more fiscal and monetary policy support from the central government. With narrowing interest margins and a weakening currency remaining key constraints limiting Beijing's scope to ease monetary policy, China's central bank left a key policy rate unchanged as expected on Monday. The world's second-largest economy grew faster than expected at 5.3 percent in the first quarter, but analysts said the government's around five percent annual growth target was ambitious. China's exports grew faster than expected in May helped by improved global demand, but growth in imports slowed significantly. Tepid demand at home has also kept a lid on consumer prices as confidence remains low in the face of a protracted property sector crisis while new bank lending rebounded less than expected in May. (Xinhua/Reuters)