Retail gross sales progress accelerated to a 17-month excessive in Might on front-loaded coverage help. Higher sentiment after US-China tariff truce supported regular export and IP progress. Property sector continued to contract, dragging down headline FAI; extra help is required, Commonplace Chartered’s economists report.
Family demand restoration continued in Might
“Actual exercise information in Might suggests family consumption picked up additional and manufacturing exercise remained resilient partly as a result of front-loading of fiscal stimulus and export orders. Industrial manufacturing (IP) and retail gross sales progress accelerated to 0.61% and 0.93% m/m, respectively. Export progress slowed however remained regular, whereas imports declined sooner y/y, leading to a bigger commerce surplus in Might. As well as, providers manufacturing index progress picked as much as 6.2% y/y. We estimate that month-to-month GDP progress stayed above 5% y/y. We subsequently see upside threat to our Q2 GDP progress forecast of 4.7% y/y.”
“In the meantime, we stay cautious on the H2 progress outlook. The housing sector stays a big drag on the economic system: property funding contracted 10.7% y/y in 5M-2025, extending 2024’s double-digit decline; residence gross sales, residence costs and new begins all fell sooner in Might relative to April. Extra coverage help is required to stabilise the market, in our view. Financial outperformance YTD has benefited from the front-loading of fiscal stimulus, together with the patron items trade-in programme, the consequences of which we anticipate to fade in H2. Externally, the continued international commerce battle will probably result in slower international progress and demand. Our baseline assumes that the present US tariffs on China might be maintained following the 90-day tariff truce reached in Geneva final month, with export orders normalising from the front-loading impact.”
