China's Mixed Signals: Industrial Growth Cools, Retail Sales Blaze in May

In May 2025, China's industrial production slightly decreased and increased by 5.8% year on year.. This is below analysts’ expectations and less than the 6.1% increase recorded in April. Although this is the slowest growth since November 2024, it implies some deceleration in the sector, with high-tech and equipment manufacturing demonstrating continued momentum. The decrease in May's growth was partly due to a weaker export performance towards the United States, although exports to other parts of the world, such as Southeast Asia, the EU, and Africa, helped offset the decline.

In comparison to other months, May 2025 marked a substantial jump in retail sales, with 6% increase from the previous year. Compared to the 5.1% increase recorded in April, this is an extraordinary surge and exceeds analysts' expectations. This increase is the quickest growth in retail sales since December 2023, partly due to the introduction of public holidays in May. Consumer activity has re-established itself, and retail sales have also rebounded, with the new energy vehicle market showing strong growth, pushing sales past 1 million units in May, which is a 28.2% year-over-year increase from the previous year.

Overall, the data reveals mixed results regarding China's economic growth in May 2025. Industrial production growth has been moderated, but it is still steady, with some sectors achieving good results. Retail sales have rebounded strongly, indicating a boost in consumer confidence, possibly due to seasonal changes and strong demand for specific items.