Slowing retail sales does not mean lack of recovery for the Chinese economy, a JP Morgan strategist believes, adding that the consumer sector may bounce back in the coming months.
Chinese consumers “are still in reasonably good shape,” Tai Hui, Asia chief market strategist at JP Morgan Asset Management, told CNBC on Friday. The analyst noted that consumer sentiment could have been affected by the recent coronavirus outbreak in Beijing, but it is not going to impede further recovery.
“We’re gonna see a little bit more signs of recovery in the consumer sector in the third quarter,” he said, explaining that by that time some of the most severely impacted sectors and services will get back to normal.
Earlier this week, China's National Bureau of Statistics (NBS) released economic results for the second quarter. While the report showed that the world’s second largest economy started regaining its footing from the economic shock of the coronavirus outbreak, it also shed light on still weak consumption in the country.
According to the statistics agency, retail sales of consumer goods dropped 3.9 percent year-on-year in the second quarter. In June alone the decline amounted to 1.8 percent compared to the same period last year. Although the decline narrowed by one percentage point from May, it was still much worse than a predicted 0.3-0.5 percent growth.
Some analysts were quick to point out that the consumer sector is one of the main challenges for China to get back on track. However, a closer look at the data shows that six of the 16 sectors that comprise the retail sales reading contracted last month. Thus sales of cosmetics, telecommunication equipment, beverages, daily use articles, alcohol and tobacco showed double-digit growth, while automobiles, petroleum products and catering services suffered the deepest slump.
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