China’s retail sales returned to growth for the first time since the coronavirus outbreak, in the latest sign that consumer spending was catching up with the country’s wider economic recovery.
Official data released on Tuesday showed a rise of 0.5 per cent in August compared with the same month a year ago. Economists had anticipated that retail sales would be flat.
Consumer demand has been a weak spot in China’s recovery from the coronavirus outbreak, which has been fuelled by state-supported industrial growth at a time when households remained cautious over spending and the risk of new outbreaks.
Retail sales have fallen every month this year before August and are still down 8.6 per cent for 2020.
“It’s going in the right direction but there’s a long way to go to characterise this as a balanced economy,” said Fred Neumann, co-head of Asian economic research at HSBC. Mr Neumann pointed out that sales remained down on an inflation-adjusted basis.
“Beneath the surface there’s still lasting scars from the pandemic . . . it will take time and government policy to heal those scars,” he added.
China’s recovery is being closely…