Economic Dispatch from Hangzhou: A Closer Look at China’s Industrial, Retail, and Financial Performance in May 2024

In Hangzhou, Zhejiang Province of China, a worker is seen welding steel on June 8, 2024. This image symbolizes the ongoing industrial activities in China and highlights the importance of the manufacturing sector in the country’s economy.

China’s retail sales in May exceeded expectations by climbing 3.7% compared to the previous year. This growth outperformed the Reuters poll of economists, who had predicted a 3% rise. However, other economic indicators such as industrial output and fixed asset investment fell short of projections.

Industrial output in China grew by 5.6% year-on-year, slightly below the anticipated 6% increase. Fixed asset investment saw a 4% rise compared to the previous year, just below the 4.2% forecasted by economists. The National Bureau of Statistics reported that total retail sales of consumer goods in May reached 3.92 trillion yuan.

Despite the positive retail sales data, the decline in fixed asset investment can be attributed to a sharp drop in real estate investment. Excluding real estate, total fixed asset investment registered an 8.6% increase compared to the previous year.

China’s urban unemployment rate remained steady at 5% in May, a slight improvement from the previous year. The country’s exports grew by 7.6% year-on-year in May, outperforming expectations, while imports only increased by 1.8%.

Loan data also indicated weak demand, with outstanding yuan loans rising by 9.3% in May, the slowest increase since 1978. M1 money supply, which includes cash in circulation and demand deposits, decreased by 4.2% in May