Key facts
- China's industrial output rose 4.5% year-on-year in May, exceeding forecasts.
- Retail sales contracted by 0.6% in May, the first monthly decline since December 2022.
- Fixed-asset investment fell 4.1% in the first five months of 2025.
- Property investment declined 16.2% in the first five months of the year.
- The national jobless rate decreased to 5.1% in May.
China's economy displayed a bifurcated performance in May, with industrial production showing strength while domestic consumption and investment faltered. Industrial output increased by 4.5% year-on-year, surpassing the 4.3% forecast and improving from April's 4.1% growth, partly aided by global AI investment offsetting export hits.
However, retail sales, a key indicator of consumer spending, fell 0.6% in May, reversing April's modest gain and marking the first monthly contraction since December 2022. This weakness in consumption is linked to softening demand, particularly in the auto sector, and the fading impact of government stimulus schemes.
Fixed-asset investment also underperformed, declining 4.1% in the first five months of 2025, a steeper fall than the 1.6% contraction in the prior period and worse than economists' expectations of a 2% decline. Property investment continued its downward trend, falling 16.2% in the first five months.
Price data further illustrated the economic imbalances, with factory-gate inflation reaching its highest level since July 2022, while consumer inflation remained stagnant, indicating that demand has not kept pace with supply-side growth. The nationwide survey-based jobless rate eased slightly to 5.1% from 5.2% in April.