China Retail Sales Shrink for First Time Since 2022 in Blow to Economy

China’s retail sales unexpectedly contracted in May, marking their first decline since late 2022. 

The slump underscores the deep-seated challenges facing the world’s second-largest economy as domestic demand falters.

Retail sales of consumer goods fell 0.6% year-on-year, missing the average forecast of flat growth in a Caixin survey. On a month-on-month basis, retail sales slipped 0.38%, marking the third consecutive monthly drop, according to National Bureau of Statistics (NBS) data released Tuesday.

The downturn was driven by a sharp pullback in spending on big-ticket items, reflecting the waning impact of earlier consumer stimulus. Automobile sales plunged 16.1%, while home appliances tumbled 15.6%. A protracted real estate crisis continued to weigh heavily on consumption, dragging building material sales down 13.6%.