CN: Retail Sales

Mon Sep 12 21:00:00 CDT 2016

Consensus Actual Previous
Y/Y % Change 10.1% 10.6% 10.2%
M/M % Change 0.83% 0.75%

Retail sales in China rose 10.6 percent on the year in August, well above the consensus forecast of 10.1 percent. This matches the growth rate recorded in June before an increase of 10.2 percent in July. Officials cited severe floods in parts of the country as a factor driving this dip in sales growth in July.

Sales rose 0.83 percent in August on the previous month, up from an increase of 0.75 percent in July. In year-to-date terms, sales growth was steady at 10.3 percent in August.

The increase in headline growth was mainly driven by stronger consumer spending in urban areas, with year-on-year growth picking up from 10.1 percent in July to 10.6 percent in August. This is the strongest growth rate since the 10.9 percent recorded last December. Growth in rural areas also rose from 10.7 percent in July to 10.9 percent in August.

Auto sales grew by 13.1 percent year-on-year in August, up from 9.2 percent in July, and consistent with other data showing strong gains in the volume of cars sold. This partly reflects a tax break aimed at boosting auto demand as well as the base effect of weakness twelve months earlier, when a sharp sell-off in the Chinese stock market undermined demand for big-ticket consumer items.

Retail Sales measure goods that are sold to the consumer or end-user, generally in small quantities and in the state in which they were purchased by the retailer. China's retail sales are reported monthly. The critical value is the change from the same month in the previous year.

Retail sales tend to have a muted impact because the Chinese economy is not heavily reliant on consumer spending. However, the government is trying to stimulate consumer spending to give the economy more balance. To this end, the government put into place a basket of stimulus measures, including government subsidies and tax breaks for home appliances and cars, to expand consumption to sustain the economic growth, which was slowed by a slump in exports amid the global economic downturn.