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China Retail, Investment Fall to Post-Pandemic Lows Despite Industrial Output Strength

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China Retail, Investment Fall to Post-Pandemic Lows Despite Industrial Output Strength

Chinese retail sales, fixed-asset and real estate investment fell to levels only seen since the COVID-19 pandemic even as tensions in the Middle East have de-escalated.

Retail sales fell 0.6% year over year to 4.109 trillion yuan in May, according to data from the National Bureau of Statistics released Tuesday.

The May reading reversed the 0.2% increase recorded in April. It missed the consensus forecast for a flat movement as tracked by Investing.com.

The decline was the first since China reopened from strict COVID-19 lockdowns in late 2022, when retail sales plunged 11.1% in April of that year, Bloomberg reported separately Tuesday.

Consumer confidence remained soft while stimulus also stayed small, which could have led to dismal retail sales, ING Chief Economist for Greater China Lynn Song said in a note.

Fixed-asset investment fell 4.1% year over year in the first five months of the year, sharper than the 1.6% decline seen in the January-April period and the deepest since the 3.8% decline for the whole of 2025.

It also missed a forecast of a 2.3% decline as tracked by Investing.com.

In contrast, China's industrial production grew 4.5% year over year in May, higher than the 4.1% expansion recorded in April and beat the consensus forecast of a 4.4% growth tracked by Investing.com

By sector, manufacturing output edged up 4.4%, mining grew 2.3%, and utilities climbed 7.6%.

On a monthly basis, industrial output rose 0.4%.

From January to May, the value added of industries above the designated size increased by 5.4% year on year.

Industrial production for sectors usually helped by real estate, such as cement, steel, and glass, saw falls of 8.1%, 2.8%, and 6.3%, the NBS said.

The fall in these sectors also echoes the plunge in real estate investments to 16.2% year over year in the first five months, faster than the 13.7% decline in the first four months.

New home prices in China's 70 major cities decreased by 3.5% year over year in May, according to calculations of NBS data by Trading Economics.

"It remains too early to confidently call a bottom for the property market, as prices continue to decline, and inventory levels remain high," Song said.

China's industrial energy production was mixed in May, with raw coal and natural gas output falling year over year, while crude oil and electricity output were up.

Raw coal production slipped 1.7% year over year to 400 million tons, compared with a 1% decrease in the previous month.

Crude oil output edged up 0.5% year over year to 18.6 million tons, while natural gas production decreased 2.2% to 21.7 billion cubic meters.

Electricity output rose 4.2% to 784.3 billion kilowatt-hours, sharper than the 2.6% increase in April.

Unemployment fell to 5.1% in May, lower than the consensus of 5.2% tracked by Investing.com and also lower than the 5.2% slide in April.

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