Cosmetics, holiday season bouy China retail sales growth

The rate of China retail sales growth rose for the second consecutive month in May, buoyed by the holiday season.

According to government data, retail sales rose 8.6 percent, which followed 8.3 percent growth in April and 7.2 percent in March.

The strongest-performing categories were cosmetics, where sales rose by 16.7 percent, food up 11.4 percent, beverages up 12.7 percent, and daily goods, up 11.4 percent.

The weakest categories included apparel and footwear, down 4.1 percent, and jewelry, down 4.7 percent.

Despite efforts by the Chinese government to encourage consumers to upgrade home appliances, that sector remained subdued, growing at 5.8 percent in May and 6.4 percent year to date.

The growth rate encouraged Jeffries Hong Kong equity analyst Summer Wang to express confidence in Chinese retail companies.

“We stay bullish on function-led premiumization and content-driven consumption,” she said in a  research note.

May’s China retail sales growth exceeded the consensus of analysts by about half a percentage point. Excluding inflation, the growth rate was estimated at 6.4 percent in May, following 5.1 percent in April.

Urban sales rose 8.5 percent, while rural sales were up 9 percent.

Sales of goods online grew by 21.7 percent in May and now account for 18.9 percent of total China retail sales.