NBS monthly figures show that industrial output continued to grow at over 6 % y-o-y in May. However, there was a slight slowdown of growth in output from April to May. Purchasing manager indices also show a similar pattern. Retail sales, in contrast, remained strong, with real growth of about 10 % y‑o-y. Strong retail sales growth suggests China is making progress in structural reform of its economy.
Real growth in fixed investment descended to around 4 % y-o-y. Growth in public sector investment slowed in May to around 6 % y-o-y, while growth in private sector investment has remained relatively stable whole year at around 2–3 %. The pace of growth in public sector investment since the start of 2016 has clearly outstripped growth in private sector investment. Even so, about 60 % of total fixed investment is still made by the private sector.
In May, the rise in consumer prices accelerated slightly and inflation was 1.5 % y-o-y. Price pressures, however, appear to be subdued and inflation is well below the 3 % official target for this year. In contrast, the rise in producer prices slowed slightly in May to 5.5 % y-o-y. The rise in producer prices should continue to slow in coming months.
Real Industrial output, fixed investment and retail sales
Sources: China National Bureau of Statistics and BOFIT.