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China’s Retail Sales Recovery: Is Consumer Spending Improving?

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China’s retail sales in June

On a year-over-year basis, China’s retail sales showed strong recovery in June 2016, according to the National Bureau of Statistics of China. The country’s retail sales rose by 10.6% in June 2016 compared to a 10.0% rise in May. This reading was well above market expectations of a 10% rise, and it was the highest since December 2015.

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Sector-by-sector performance

In terms of sector-by-sector performance, sales increased in building materials by 14.2%, in furniture by 13.4%, in home appliances by 12.3%, in telecommunications by 12.1%, in personal care by 11.7%, in automobiles by 9.5%, and in cosmetics by 7.9%.

Economic impact

The improvement in sales in different sectors signifies that consumer sentiment is improving in the economy. After the slowdown in economic activity in China (FXI) (YINN) (ASHR), the economy is going through a transitional phase. From a manufacturing hub, it’s transitioning to a consumer-based economy. Consumerism will play a large role in the future growth of the country’s economy.

Consumption patterns are changing in China’s economy. Chinese consumers (MCHI) are becoming more selective toward the products and services that they use. This indicates that the economic trend is changing. As China is one of the world’s (ACWI) (VT) most important economies, improvement in its growth drivers will aid the world economy.

In the next part of this series, we’ll analyze the performance of US retail sales in June 2016.

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