China’s Consumption Crashes! Stimulus Impact Fades – What This Means for the Global Economy

Despite indications of improvement in the housing market, China’s retail sales growth unexpectedly slowed in November, underscoring the need for Beijing to further incentivize citizens to spend.

The weakest rate in three months, retail sales increased 3% from a year ago, falling short of even the most pessimistic projections. As the manufacturing sector of the economy continues to exceed consumer spending, industrial output grew by 5.4%, maintaining momentum.

The figures

China’s National Bureau of Statistics said on Monday that retail sales increased 3% from the previous year. According to a Bloomberg survey of economists, it was the slowest pace in three months and below estimates of 5% growth.

As the nation’s manufacturing sector continues to exceed consumer spending, industrial output rose 5.4%, about in line with the previous month’s results.

Consumer goods sales fell 26% from a year ago, with cosmetics leading the slide. Sales of apparel, beverages, and alcohol and tobacco also declined.

The background

A month earlier, sales of autos and home appliances were strong, which observers credited to the introduction of additional government subsidies. This was followed by a decline in retail sales.

The early Single’s Day shopping event, which began in October instead of November this year, was partially blamed for last month’s slowdown.