China: Annual retail sales growth eases to six-month low in June, but underlying momentum is solid
Retail sales expanded 12.1% in year-on-year terms in June, which was a deterioration from May’s 12.4% increase. June’s result marked the worst reading since December 2020, although this was largely due to the base effect.
On a monthly basis, retail sales rose 0.7% in seasonally-adjusted terms in June, which was below May’s 0.8% expansion. Meanwhile, the trend improved sizably, with the annual average growth of retail sales coming in at plus 13.4% in June, up from May’s 12.2% reading.
June’s data shows consumer spending was resilient at the end of Q2, notwithstanding the flare-up of Covid-19 cases in Guangdong province. While year-on-year retail sales growth will moderate in H2, underlying consumer spending momentum (stripping out base effects) should be healthy as the labor market improves and the vaccine rollout accelerates.