China saw retail sales increase last month for the first time since the COVID-19 outbreak, another sign of the country’s wider recovery.
Consumer spending rose by 0.5 percent in August compared to the same month a year ago, according to data released Tuesday (Sept. 15), the Financial Times (FT) reported.
The latest numbers were a surprise as economists had predicted retail sales would be flat.
Consumer sales have lagged, a weak spot in China’s recovery from the pandemic. The country’s resurgence has been fueled by the government’s support of industrial growth, which saw improvements every month since January.
While commercial production has swelled, households have been reluctant to go out and spend given a rash of new outbreaks. Retail sales have slipped every month this year and are down nearly 9 percent for 2020.
“It’s going in the right direction, but there’s a long way to go to characterize this as a balanced economy,” Fred Neumann, managing director at HSBC Holdings Plc., the London-based global investment bank and financial services company, told the FT. “Beneath the surface there’s still lasting scars from the pandemic...it will take time and government policy to heal those scars.”
Other numbers were more encouraging as China deals with high infection rates and lockdowns.
Real estate investment has improved by 4.6 percent since January compared to the same period in 2019. Industrial production grew 5.6 percent in August compared with the same month last year, and up 0.4 percent overall this year.
In addition, China’s economy grew in the second quarter as the gross domestic product, the total value of goods produced and services provided in one year, added 3.2 percent after it fell to record lows in the first quarter.
Oxford Economics, the Oxford, England-based global economic forecasting consultancy, told the newspaper China’s economic recovery was on a reasonably firm footing now and should continue through Q4 and into 2021, with solid investment growth, gradually recovering consumption momentum and resilient exports.
Earlier this month, Bloomberg News reported Chinese shoppers consumers are spending on luxury items. Handbags, cosmetics and vehicle sales are doing well after months of being at home.
“Consumers are definitely looking to treat themselves following the scare from the outbreak,” said Catherine Lim, a Bloomberg analyst based in Singapore.
LVMH, a Paris-based luxury goods provider, saw sales in China jump by 65 percent in the second quarter (Q2) compared to the same period one year ago. In addition, Kering, another Paris luxury goods retailer, saw sales jump 40 percent in mainland China in Q2.