China’s August Retail Sales Rise Just 0.4% as Industrial Output Speeds Up to 5.2%

China’s pattern of rising production and stalled consumption continued in August. Industrial output rose 5.2% from a year earlier, the National Bureau of Statistics said on Sept. 15, but retail sales grew only 0.4%. Fixed-asset investment fell 7.2% in January–August, widening the gap between businesses that depend on domestic demand and those in manufacturing supply chains.

By the editorial desk

Factories ran faster

Value added of industrial firms above designated size rose 5.2% in August, 0.7 percentage points faster than in July. Equipment manufacturing grew 12.1% and high-tech manufacturing 16.7%, leading the gains. By product, output of lithium-ion batteries (57.2%), industrial robots (34.6%) and 3D printing equipment (29.9%) rose sharply.

Cars dragged on consumption

Retail sales of consumer goods were 3.98 trillion yuan in August, up 0.4%. A large part of the weakness came from car sales, which fell 18.5%; excluding cars, retail sales rose 2.5%. Telecom equipment (27.3%) and tobacco and alcohol (12.5%) sold well, while gold, silver and jewellery (-17.5%), furniture (-7.9%) and petroleum products (-7.0%) declined. Sales at larger retailers fell 3.7%.

Property behind the investment slump

Fixed-asset investment fell 7.2% in January–August. Property development investment dropped 19.9%; excluding property, the decline narrows to 4.2%. Private investment fell 10.1% and fixed-asset investment by foreign-invested firms 4.3%. Sales of newly built homes fell 13.0% by value.

The surveyed urban unemployment rate rose 0.1 point to 5.3% in August. Consumer prices rose 0.8% and producer prices 3.8%.

Bureau acknowledges strong supply, weak demand

The statistics bureau said the economy was generally stable, but noted that the adverse impact of the external environment had deepened, the domestic imbalance of strong supply and weak demand was prominent, and some companies faced difficulties. China’s customs data show August exports up 25.0% in dollar terms, suggesting exports rather than domestic demand are supporting output.

Business Checkpoints

Retail, food service and consumer-goods distributors that rely on Chinese domestic demand are faring very differently from suppliers of parts and materials to manufacturers. Retail sales growth is a nominal figure, not adjusted for prices, so domestic-facing businesses should keep sales plans for the rest of the year conservative.

With property development investment down almost 20%, customers in construction, interior fit-out and building materials may pay late. If payment terms start to stretch, review collection terms first. Producer and purchase prices are rising, so raw-material costs also need watching.

※ This article is based on data released by the National Bureau of Statistics of China and Korean media reports.