The latest data on retail sales during China’s National Day “Golden Week” period suggest that consumer demand remains strong. Despite a further increase in overseas tourism during the holiday, domestic spending was 10.3% higher than last year, only fractionally smaller than the increases in 2016 and 2015. This shouldn’t be surprising. After all, China’s labour market looks healthy. The ratio of job openings to job seekers is close to a record high. Consumer confidence has risen steadily this year. And wage growth has edged up over the past few quarters while the unemployment rate has fallen. Looking ahead, we expect economic growth in China to slow gradually over the coming quarters. But consumers should weather the slowdown better than the rest of the economy, just as they did during the last downturn two years ago.
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