Retail disappointment hits global markets

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Although the Chinese economy is still on the up, the recovery of the Chinese economy slowed in July. National retail sales in China rose 8.5 percent year over year, falling short of expectations and signaling a possible new decline if the Delta variant virus outbreak kicks in.

Although the Asian giant’s retail sales missed consensus analysts’ forecast for July (11.4 percent growth), the numbers were still above 2019 levels, according to Yahoo Finance data. In fact, total consumer goods sales rose 7.2 in July Percent compared to the same period last year.

In July, clothing sales in China rose 7.5 percent, while jewelry sales rose 14.3 percent. Online retail sales, which account for 23.6 percent of total retail sales, increased 17.6 percent year over year. In the first seven months of the year, total sales increased 20.7 percent year-on-year.

In a market note on the numbers, Iris Pang, chief economist for Greater China at ING Bank, warned, “We see few positive factors for the economy, instead we see more risk factors.” She described some of the most pressing threats to the recovery of the Chinese economy: “In China experienced more floods. The COVID-19 variant Delta is spreading on the mainland, although the number of cases is still below 200 per day. Strict social distancing measures have impacted the ports in Ningbo and Shanghai, which are close to each other. Strict social distancing measures also limit the flow of people on the mainland, limiting domestic recreational travel and spending during summer vacation. “

China’s factory production and retail sales fell sharply in July

The impact of new coronavirus flavors and extreme weather impacted China’s factory production and retail sales growth earlier this summer. As a result, these indicators fell sharply in July and fell short of expectations, suggesting that the country’s economic recovery has stalled.

Chinese industrial production rose 6.4 percent year over year in July, according to data from the National Bureau of Statistics. That surge fell short of analysts’ expectations for a 7.8 percent increase in July. Meanwhile, retail sales rose 8.5 percent year-over-year, again below the estimated 11.5 percent increase.

The slowdown in the Chinese economy is holding back global equity trading

In that context, online sales of physical consumer products rose 4.4 percent in July, well below the average of about 21 percent over the past five years, according to calculations by CNBC official data. This acute slump was partly due to massive June shopping drives followed by logistics disruptions in July amid Covid-19 travel restrictions, floods and typhoons, said Bruce Pang, head of macro and strategy research at China Renaissance. In June, Alibaba and JD.com achieved record sales of $ 136.51 billion during the major 618 shopping event on June 18.

Based on China’s economic update, weaker global equity trading shows growing unease in the market at the slow growth of the Asian country, the world’s second largest economy. “Asia’s low vaccination rates and low tolerance for spread in the community suggest it is the region most economically vulnerable to the Delta variant,” said Reuters JPMorgan economist Bruce Kasman. He added, “China is in the midst of a political support disengagement which is likely to slow domestic demand growth and weigh on regional performance for the remainder of this year. As these problems have built up in the last few weeks, we have lowered the regional growth forecasts for 2H21. “

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