China’s retail sales unexpectedly contracted in May, marking their first decline since late 2022.
The slump underscores the deep-seated challenges facing the world’s second-largest economy as domestic demand falters.
Retail sales of consumer goods fell 0.6% year-on-year, missing the** average forecast **of flat growth in a Caixin survey. On a month-on-month basis, retail sales slipped 0.38%, marking the third consecutive monthly drop, according to National Bureau of Statistics (NBS) data released Tuesday.
The downturn was driven by a sharp pullback in spending on big-ticket items, reflecting the waning impact of earlier consumer stimulus. Automobile sales plunged 16.1%, while home appliances tumbled 15.6%. A protracted real estate crisis continued to weigh heavily on consumption, dragging building material sales down 13.6%.
NBS spokesperson Fu Linghui attributed the headline figure to extreme weather and a high base of comparison from 2025, when large-scale trade-in programs boosted spending.
He said household spending power and willingness to consume still require enhancement, calling for efforts to stabilize employment and boost incomes.
To capture a broader consumption picture — as the headline retail sales metric excludes non-catering services — the NBS debuted a combined growth rate for retail sales of goods and services. The new measure rose 2.8% year-on-year in the first five months, down 0.4 percentage points from the first four months.
Contact editor Lin Jinbing (jinbinglin@caixin.com)