China’s retail sales growth slowed in August for the first time in a year.
Retail sales growth in China fell to a 12-month low in August, according to statistics released Wednesday, as regions of the country were impacted by lockdowns and other containment efforts to combat the largest Covid epidemic since it began in 2020.
The results are the latest evidence of a slowdown in the world’s second-largest economy, with analysts warning that a new flare-up might exacerbate the problem, as well as a crackdown on private businesses.
Last month, retail sales increased 2.5 percent, much below the seven percent expected and significantly lower than the 8.5 percent seen in July. It was the lowest reading since August 2020.
Industrial production growth was likewise lower than expected and slower than the previous month.
The news comes amid a slew of indicators that the economic rebound that began last year was fading at the start of 2021.
As a new domestic coronavirus flare-up kicked in, China’s services sector declined for the first time since the start of the pandemic, while factory activity only increased moderately.
The outbreak this summer was China’s greatest since the first at the beginning of the year, requiring officials to quarantine millions of people and restrict travel during the busy tourist season.
Ting Lu of investment bank Nomura stated in a research note that the sluggish growth rates are “primarily owing to the Delta variant wave and unprecedented tightening measures on the property sector,” referring to Beijing’s moves to tighten regulations on real estate enterprises.
“Unfortunately, a new wave is diminishing the hope (of a recovery) in Fujian province… China’s zero-Covid approach, we believe, will become increasingly damaging to the Chinese economy.”
However, export demand remained robust, especially as virus outbreaks hampered competing manufacturers.
“The disruption of industrial output in major… manufacturing hubs like Vietnam and Malaysia as a result of growing Covid-19 Delta waves has also helped to shift export orders to China, benefiting Chinese export manufacturing firms,” said Rajiv Biswas, an analyst for IHS Markit.
At 5.1 percent, the jobless rate remained constant.
After reaching a five-year high of 6.2 percent in February 2020, officials have been concerned about unemployment sparking societal instability.