Holiday sales more signs that China's growth is slowing
Lunar New Year holiday period did not yield faster pace in retail sector compared with 2018
Shanghai — Sales by China’s retail businesses during the Lunar New Year holiday rose 8.5% from a year earlier, pushing up consumer stocks on Monday, but a cooler pace of growth added to evidence the economy is slowing.
The ministry of commerce, in a notice on its website late on Sunday, said retail and catering enterprises had revenue of more than 1-trillion yuan ($148.3bn) between February 4 and 10 during the holiday.
It attributed the increase to stronger sales of new-year gifts, traditional foods, electronic products and speciality products.
The holiday is considered a barometer for Chinese private consumption as it is the time for family reunions as well as gift-giving.
China’s economic growth slowed to 6.6% in 2018 — the weakest pace in 28 years — and is expected to cool further in 2019 before the government growth boosting measures stabilise activity from mid-year.
On Monday, when China’s financial markets reopened, the blue-chip index rose 1.8%, and the consumer staple index surged 4%.
Liquor maker Kweichow Moutai jumped nearly 5% while home appliance makers Gree Electric Appliances and Midea Group closed up 2.7% and 4.1%, respectively.
But the growth rate for holiday retail sales fell to its lowest since at least 2011. During the 2018 Lunar New Year holidays, the annual increase was 10.2%.
Nomura analysts said the fresh data indicated how consumers were further tightening their belts, and noted that it was the first time Lunar New Year retail sales recorded single-digit growth since the government started publishing data in 2005.
“Weak consumption during the Lunar New Year holidays in 2019 does not bode well for overall retail sales growth,” Nomura said in a note on Monday.
Domestic tourism during the new year break generated revenue of 513.9-billion yuan, up 8.2% on the year, with the number of trips rising 7.6% to 415-million, the official Xinhua news agency said on Sunday.
Domestic consumers were the main engine behind China’s economic expansion in 2018 as other growth drivers such as manufacturing and trade faltered, but their spending has already showed signs of softening.
Retail sales grew the least in 2018 in 15 years, slowing markedly in the final quarter of the year, as incomes increased at a slacker pace while the cost of living rose. Sales in the world’s biggest auto market shrank for the first time since the 1990s.
The topic of how much people spent over the holiday was widely discussed on Chinese social media, with some netizens saying they stayed home to save money while others said they borrowed money to celebrate.
“My hard work that went into achieving one year of savings is no match for the short Spring Festival holiday,” said a post on Weibo that garnered more than 5,000 comments.