China’s Retail Sales Beat Forecasts as Industrial Output Slows in May

China’s industrial output rose 5.8% year-on-year in May, slowing from 6.1% in April and missing analysts’ expectations for a 5.9% increase, according to data released Monday by the National Bureau of Statistics (NBS). This marks the weakest industrial growth since November 2023, reflecting ongoing pressures in the manufacturing sector.

In contrast, retail sales—a key indicator of consumer demand—surprised to the upside, rising 6.4% in May from a year earlier. This represents an acceleration from April’s 5.1% gain and is the strongest performance since December 2023. Analysts surveyed by Reuters had forecast a more modest 5.0% rise, indicating stronger-than-expected consumer activity.

Fixed asset investment, which includes spending on infrastructure, property, and equipment, rose 3.7% in the January-May period compared to the same timeframe last year. That figure fell short of the anticipated 3.9% increase and was slightly down from the 4.0% growth recorded from January to April.

The mixed data highlights China’s uneven economic recovery as policymakers work to boost domestic consumption and investment amid lingering global uncertainty and weak external demand. While consumer spending shows resilience, industrial activity continues to face headwinds from sluggish export markets and tepid business sentiment.

Economists expect Beijing to introduce further stimulus measures in the coming months to stabilize growth, especially in light of ongoing deflation risks and a still-struggling real estate sector. Market participants will closely watch upcoming policy signals from the central government and the People’s Bank of China as they weigh the next steps for economic support.

The May figures offer a glimpse into the challenges facing China’s post-pandemic recovery, with consumption emerging as a bright spot even as industrial and investment metrics remain under pressure.