Gerard Burg, Senior Economist at NAB, explains that recent months have seen a significant softening trend in Chinese retail sales – to the weakest levels in over fifteen years – despite measures of consumer confidence remaining near record highs.
Key Quotes
“Overall growth in retail sales has been generally trending downwards since peaking in mid-2008, dropping below double-digit rates in late 2017. When adjusted for retail price inflation, the slowdown in retail sales has been a little stronger – with growth at just 5.8% yoy in October, the weakest rate of growth since May 2003 and slower than the overall rate of growth of the economy in the third quarter.”
“The weakness in retail sales data is in stark contrast to the strength in consumer confidence.”
“The lack of disaggregation in retail sales data – particularly between public and household purchases and the exclusion of some key service sectors – means that the measure does not provide a sufficient clarity around trends in private consumption. That said, the underlying trends in retail sales at least point towards the direction of consumption, providing a more timely indicator than either the annual expenditure measure in GDP or quarterly survey results.”
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