MNI REALITY CHECK: China Oct Holiday Sales Hit By Virus Cases

China's October retail sales likely slowed from a moderate recovery the previous month as outbreaks of Covid-19 cases spread through over 10 provinces and overshadowed consumer spending during a normally brisk holiday period, industry insiders and analysts told MNI.

Retail sales likely rose 2.7% in October from a better-than-expected 4.4% gain in September, said Zhang Yu, chief analyst at Huachuang Securities. She noted that a leading indicator PMI of the services industry came in at 51.6, which was lower than the previous 52.4 and was at a historic low level in the same period.

The median of analysts' expectations for October retail sales polled by Bloomberg was 3.7% y/y. The data will be released Monday, Nov.15 at 1000 Beijing Time.

TAME TOURISM

Though people enjoyed a week-long National Day holiday in early October, they were more inclined to spend the holiday in town or travel nearby due to concerns about the virus, said Zhang. Some 515 million travelers spent CNY389 billion over the so-called Golden Week break, down 1.5% and 4.7% from a year ago respectively, according to data by the Ministry of Culture and Tourism.

"Two- or three-day trips costing a few hundred yuan were more popular than those expensive week-long tours this year, as the epidemic has caused unemployment and dented residential income," said a staff member at the China Youth Travel Service in Hohhot city, capital of the Inner Mongolia Autonomous Region in northern China. He noted that the number of group tours during the holiday almost halved when compared to the pre-pandemic level.

Tourism in Hohhot took another hit in mid-October when tourists who had been to scenic spots in Inner Mongolia were found Covid-19 positive and the government had suspended inter-provincial tourism businesses.

"We are forced to take time off without pay or subsidy and not sure when the businesses can be resumed," the staff member said, noting that some peers tried other businesses as a lot of travel agencies closed in the past year.

SLUGGISH CAR SALES

According to China Passenger Cars Association, retail sales of cars totaled 1.72 million in October, down 13.9% y/y or 7% from the pre-pandemic level, though narrowing from the 17.3% decline in September. On a monthly basis, car sales increased 8.6% from September, improving moderately when compared with the 4% growth in October of previous years, the CPCA said.

A shortage of semiconductors also eased by the end of September, aiding the October rebound, though the low inventory of models on sale and prolonged delivery times weighed, CPCA said. Some dealers took the opportunity to reclaim preferential prices or hike the prices of supporting products, the CPCA added.

Online shopping growth rates during the holidays likely were also hit going by decelerated parcel delivery growth, said Zhang. The postal and express delivery industry has collected 1.99 billion parcels during the holiday, a rise of 28.31% y/y, which is slower than the 53.42% increase in the last National Day holiday, data by the State Post Bureau showed.