Retail spending, including restaurants, drops sharply in November

Retail sales in China were down 5.9% year on year in November as rising Covid cases and lockdowns kept consumers at home. This is the biggest year-on-year decline since May. 

Restaurant spending took a bigger hit, falling by 8.4% year on year. Spending on food also underperformed. 

From March through October, spending on groceries was up an average of 12.1% each month, but in November this was up just 6.9%. This is the lowest year-on-year growth seen in 2022. This is notable as October through December see strong seasonal spending ahead of the Chinese New Year holiday. While spending did increase by 4.5% compared to October, this is the weakest month-on-month increase since at least 2019.

Spending on groceries and medicine were the only categories in the retail sales data that show year-on-year growth. 

Major declines were seen in clothing (-15.6%), household appliances (-17.3%), and communication equipment including smartphones (-17.6%).

December data will likely see this trend continue as the sudden reversal of Covid policies, and subsequent rapid rise in infections is leading to consumers staying home and avoiding shopping centers.