China’s Retail Sales Surge 6.4% in May, Fastest Growth Since Dec 2023

Beijing – China’s retail sales soared by 6.4% year-on-year in May 2025, marking the fastest pace since December 2023. The rise exceeded analysts’ expectations of 5% and outpaced April’s 5.1% growth, driven by government-led trade-in incentives and extended public holidays.

The Labor Day and Dragon Boat Festival holidays played a key role in boosting consumer activity, alongside consumption vouchers and targeted policies to replace older consumer goods.

Meanwhile, industrial output growth eased to 5.8%, narrowly missing the 5.9% forecast and reflecting slight slowing momentum. Fixed-asset investment rose 3.7% year-to-date, falling short of the projected 3.9%, with property investment plunging 10.7%, the sharpest fall in months.

China’s urban unemployment rate improved to 5.0%, the lowest since November 2024. However, falling property prices and weak domestic demand continue to weigh on consumer sentiment.

On the external front, exports remained pressured by U.S. tariffs, despite a 90-day truce deal in May. Exports to the U.S. dropped over 34%, the worst since February 2020, while shipments to Southeast Asia and the EU remained strong.

Economists suggest that while the export sector shows resilience, deflation risks and dampened consumer prices are pressing issues for policymakers. Yet, expectations remain high that China’s GDP growth will surpass 5% in the first half of 2025.