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China's recovery falters as retail sales dip unexpectedly

By Sean Farrell

Date: Friday 14 Aug 2020

China's recovery falters as retail sales dip unexpectedly

(Sharecast News) - China's retail sales dipped unexpectedly and manufacturing output disappointed in July fuelling concerns about the strength of the recovery in the world's second-biggest economy.
Retail sales fell for the seventh month running, dropping 1.1%. The result was stronger than June's 1.8% decline but missed analysts' average estimate for a 0.1% increase, the National Bureau of Statistics said. The drop covered clothing, cosmetics, home appliances and furniture though car sales rose.

Factory output rose 4.8%. The reading was in line with June but was below the average forecast of 5.1%.

Weakness in domestic consumption has slowed China's recovery, which began in the second quarter as the country emerged from a strict lockdown to contain the Covid-19 pandemic.

Consumers have been wary about going out and spending faced with continuing cases of coronavirus and the prospect of job losses as companies seek to offset rising costs and weak revenues. Southern China has also been hit by floods since June.

Michael Hewson, chief market analyst at CMC Markets, said: "Retail sales growth in China hasn't been the same since the country came out of lockdown at the end of February, though optimism over the July numbers had been increasing.

"This makes today's negative reading of 1.1% somewhat of a surprise, and shows that the Chinese consumer still remains quite nervous about coming out of hibernation."


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