Add falling retail sales to mounting inventories, hot money outflows, deteriorating manufacturing activities and many other signs that China’s economic decline has been spreading and worsening.
From Bloomberg,
China’s retailers from clothing to computers are reporting weaker sales growth, undermining Premier Wen Jiabao’s goal of relying more on consumer spending for expansion as the economy cools.
Passenger-vehicle sales trailed analysts’ estimates in July. Sportswear seller Li Ning Co. shut 1,200 stores in the first half and department-store chain Parkson Retail Group Ltd. (3368)’s same-store sales rose at less than a quarter the pace of a year earlier. Gome Electrical Appliances Holding Ltd. (493) said it would report a first-half loss on lower sales.
The reports show an extra drag on the second-largest economy after export growth almost stalled in July and factory output missed forecasts. The year’s fastest decline in industrial companies’ earnings and a stock market at a three- year low mean income gains may slow, giving consumers less money to spend and boosting odds Wen will add stimulus.
“The pressure on retail sales is growing bigger and bigger,” said Shen Jianguang, Hong Kong-based chief Asia economist at Mizuho Securities Asia Ltd. “When exports are fragile and investment is weak, if companies started to reduce their production or workforce, how can it be possible for consumer spending to stay strong?”
Retail sales missed economists’ forecasts in three of the last four months and Mizuho said they will stay weak. Sales increased 13.1 percent in July from a year earlier, the National Bureau of Statistics said Aug. 9, compared with the median 13.5 percent estimate of 32 analysts surveyed by Bloomberg News.
Again, this seems more of a hard landing than a slowdown.
Even the China’s major equity bellwether the Shanghai Composite, which recently has been broken to new lows seem to be confirming this.
Be careful out there.
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