China’s 1st consumer spending drop since Covid imperils growth

China’s consumer spending contracted last month for the first time since the pandemic and investment deteriorated, exposing risks still facing the economy even as it benefits from booming exports and a deescalation in tensions around Iran. Retail sales declined 0.6% from a year ago, posting their first drop since the reopening from Covid lockdowns in late 2022 that was worse than predicted by economists surveyed by Bloomberg. Fixed-asset investment also shrank far more than expected by retreating 4.1% in the first five months from a year ago, according to data released by the National Bureau of Statistics on Tuesday. Industrial production climbed 4.5%, up from 4.1% in April and slightly better than forecast. The surveyed urban jobless rate eased to 5.1%. Housing crisis and weak jobs growth keep spending subdued Hobbled by the housing crisis and fragility in the jobs market, domestic consumption is nowhere near a turnaround after lagging growth among manufacturers and exporters. And without stronger demand at home, the economy is at risk of a deeper slowdown even as the US-Iran deal to reopen the Strait of Hormuz holds out the promise of stabilizing global shipping and energy markets. Despite the economy’s overall stability, “the external environment has become increasingly complex and volatile, and the domestic imbalance of strong supply and weak demand remains pronounced,” the NBS said in a statement. “Some enterprises face significant operational pressure.” The spurt of export growth this year has still been sufficient to keep China’s economy on track to meet the government’s official full-year target of 4.5% to 5%. A global investment supercycle in artificial intelligence is driving up prices and demand for hardware made by the world’s manufacturing powerhouse. Outbound shipments soared in May at their fastest pace in three months. Chips and computers contributed to about half the growth in both exports and imports, with overseas sales of semiconductors soaring 111%. Stabilizing trade ties with the US, reinforced by President Donald Trump’s visit to Beijing, further bolster the outlook. Why China’s stimulus support stays on hold Policymakers have appeared to be taking a wait-and-see approach in responding to China's two-speed growth, after efforts to coax consumers into spending delivered gains that proved fleeting. Purchases of home appliances and furniture as well as cars — products that used to be buoyed by government subsidies — are slumping. The government dialed back public spending in March and April as bond sales decelerated. Authorities likely felt comfortable with the economy’s first-quarter performance, though economists also pointed to a potential lack of eligible projects. “China’s outlook remains one of stability without much upside,” Societe Generale economists including Wei Yao said in a note before the data release. “Weak housing wealth effects, cautious households and a slow labor-market recovery continue to cap spending. The scaling-back of trade-in support also suggests limited policy urgency.”

China’s 1st consumer spending drop since Covid imperils growth

How Bottega Veneta weaved China’s forever it bag

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China’s 1st consumer spending drop since Covid imperils growth

How Bottega Veneta weaved China’s forever it bag