China economy weakens further in May as retail sales post first drop in over three years

SHENZHEN, CHINA - MAY 3: The national flag of China flies on a flagpole near a construction site with tower cranes and a high-rise building under development on May 3, 2026, in Shenzhen, Guangdong Province, China. Cheng Xin | Getty Images News | Getty Images China's retail sales fell for the first time in more than three years in May while urban investment contracted more than expected, signaling a deepening economic slump, according to data released Tuesday by the National Bureau of Statistics. Retail sales, a gauge of consumption, declined in May for the first time since December 2022, dropping 0.6% from a year earlier, as the Labor Day holiday at the start of May failed to offset the country's sluggish consumer spending. That figure came in lower than the forecast for no change among economists polled by Reuters. China's urban fixed-asset investment, including real estate and infrastructure, contracted 4.1% this year as of end-May from a year earlier, compared with the estimated 2% decline and steepening from the 1.6% drop in the first four months this year. Real estate dragged on investment, with inflows falling 16.2% in the January-to-May period, while manufacturing fixed-asset investment contracted for the first time since December 2020, Wind data showed. Investment in infrastructure grew 0.6% from a year earlier. Industrial output was the lone bright spot, rising 4.5% in May to top estimates of 4.3% growth and rebounding from April's near three-year low of 4.1%. …