China Consumption Monthly Roundup | November 2023 Chartbook

28 November 2023 / Report

Our Monthly Consumption Roundup tracks near-term consumption trends and underlying key drivers for China. Learn more about the key highlights for October.

Trusted Insights for What’s Ahead^TM

Retail sales accelerated in October (7.6 percent y-o-y vs 5.5 percent in September). However, this was on the back of a very low base last year: growth dropped to -0.5 percent y-o-y in October 2022. Despite favorable headline figures, the growth momentum in consumption is actually moderating.
Looking at big-ticket spending, auto sales posted strong growth, benefiting from ongoing policy support and seasonality. This strong sales momentum is expected to continue for the remainder of the year.
Policy support has not been sufficient to help the residential property sector bottom out from its current downturn, with new housing sales and property investment still in deep contractionary territory. Households’ high savings rate and persistent weakness in confidence levels suggest that prospective homebuyers remain cautious about the outlook of the real estate market.
Looking ahead, consumption growth is likely to moderate compared to Q3, which saw an uptick in spending thanks to a release of pent-up demand. While policy measures will provide some support for continued spending, for instance in the automotive sector, this will not be sufficient to offset the negative impact that the ongoing downturn in the real estate sector and weak hiring intentions are having on households’ willingness to spend. Still, Q4 headline growth figures will likely look deceptively strong thanks to the low base of comparison of 2022. Going into 2024, pandemic-related volatility in consumption growth data will fade, which means consumption growth will depend largely on improvements (real or expected) in income increases and labor market conditions.