China retail sales data in June grew by 3.1% year on year, according to data from the National Bureau of Statistics. This relatively strong data comes as Q2 GDP was reported as growing only 0.4%, well below market expectations.
Restaurant spending was still down 4% y/y, however rose 25% compared to May. This is the fastest monthly growth reported since April and May 2020 (26% and 31% respectively). This remarkably strong growth in restaurant spending seems at odds with number of cities suspending in-person dining amid Covid outbreaks and many reports in restaurant industry publications about the dire state of the industry.
Some cities have issued coupon schemes to help stimulate restaurant spending, but that would indicate the industry was doing poorly and needed stimulus. Additionally, the size of the coupon schemes is relatively small compared to the size of the market and wouldn’t account for such a dramatic increase in retail spending at restaurants.
On the other hand, spending on groceries and food continues to be strong and rose by 7.9% m/m and was up 11.35% y/y.