China retail sales growth slowed further in April 2026

Overview

This report focuses on China's retail sales data for April 2026. Morgan Stanley notes that overall retail sales rose just 0.2% YoY, below consensus and slower than March. Growth weakened across most categories, especially discretionary items, indicating that the consumer recovery path remains gradual and uneven.

Core views

The report's core view is that China's consumer recovery is still progressing slowly and unevenly. In April, both merchandise retail sales and online sales softened; merchandise retail recorded its first post-pandemic YoY decline. Discretionary categories such as gold and jewelry, electronics and appliances, and home furnishings were a clear drag. Dining remained relatively resilient, but it too slowed. Morgan Stanley expects no meaningful recovery in May, with soft consumer sentiment over the Labor Day holiday as an important backdrop.

Analysis framework

The report assesses consumer momentum mainly through YoY growth, CAGR versus 2019, trends by category, adjustments for a high base, and potential company-level implications. The analysis compares April with March and also looks at divergences among online sales, merchandise retail, dining, and different consumer categories.

Methodology notes

• Macro consumer data trackingYoY growth analysis

  Measure monthly consumer momentum using retail sales YoY growth.

  The report compares April retail sales growth with consensus and March data to judge whether the recovery is accelerating or slowing.

• Macro consumer data trackingCAGR versus 2019

  Use the CAGR relative to 2019 to gauge the post-pandemic recovery level.

  The report says overall momentum, on a 2019 base, fell from 4.0% in March to 2.9% in April, indicating a further weakening in the recovery slope.

• Data basis adjustmentHigh-base adjustment

  Reported YoY growth for some categories includes base resets or adjustments.

  The report notes base resets in some categories and compares reported YoY growth with YoY growth calculated from previously disclosed absolute amounts.

• Industry viewIndustry View In-Line

  The analyst expects the industry's performance over the next 12 to 18 months to be broadly in line with the relevant market benchmark.

  The report discloses an Asia Pacific industry view of In-Line, which implies a neutral view on relative performance versus the broader market.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Mengniu (2319.HK)

  A beneficiary of supply rebalancing and improving demand

  Strengths

  If dairy supply adjustment and demand improvement materialize, fundamentals could improve.

  Weaknesses

  Overall consumer sentiment remains weak, so the recovery pace may be slow.

  Comparison

  Compared with categories that depend more on discretionary impulse, it has a relatively stronger essential-consumption profile.

  Risks

  Demand recovery falls short of expectations, price competition, and channel inventory pressure.

• Yili (600887.SS)

  A beneficiary of supply rebalancing and improving demand

  Strengths

  As a mass-market consumer staple, it could benefit from a mild demand recovery.

  Weaknesses

  Profitability upside may be limited when industry growth slows.

  Comparison

  Compared with highly volatile gold and jewelry or electronics and appliances, demand is relatively more stable.

  Risks

  Weak consumer sentiment, intensifying competition, and pressure from raw materials and channel expenses.

• YUMC (YUMC.N)

  A name to watch for offline consumption improvement

  Strengths

  The restaurant segment is relatively more resilient than retail goods.

  Weaknesses

  The report shows that dining growth has also slowed.

  Comparison

  Compared with merchandise retail, dining remains one of the few relatively stable consumption scenarios.

  Risks

  Foot traffic recovery falls short of expectations, same-store sales slow, and cost pressure.

• Haidilao (6862.HK)

  A name to watch for offline consumption improvement

  Strengths

  Beneficiary of in-store dining and services consumption recovery.

  Weaknesses

  Dining growth slowed from March to April, leaving limited near-term elasticity.

  Comparison

  Compared with online or merchandise consumption, dining is more sensitive to holiday traffic and consumer sentiment.

  Risks

  Soft consumer sentiment after Labor Day, weaker-than-expected table turnover recovery, and store expansion risks.

• CRB (291.HK)

  A name to watch for offline consumption improvement

  Strengths

  Beer consumption may benefit from better restaurant traffic and improved offline activity.

  Weaknesses

  The overall consumer recovery is uneven, and demand improvement still needs to be confirmed.

  Comparison

  Has a stronger link to the restaurant chain than pure merchandise retail.

  Risks

  Weak restaurant traffic, slower product mix upgrading, and competitive pressure.

• Giant Biogene (2367.HK)

  A name with company-specific drivers and an attractive risk/reward profile

  Strengths

  The report identifies it as a name with company-specific drivers that could support improvement and an attractive risk/reward setup.

  Weaknesses

  The broader discretionary consumer environment remains weak, limiting sector beta support.

  Comparison

  Its investment case depends more on company-specific improvement than on a macro consumer recovery.

  Risks

  Weak consumer sentiment, growth missing expectations, and valuation pullback.

Key data

• April China retail sales YoY growth0.2%Below the market consensus of 2% and slower than March.
• CAGR relative to 20192.9%Down from 4.0% in March, indicating weaker overall consumer momentum.
• Merchandise retail YoY growth-0.1%The report says this was the first post-pandemic YoY decline.
• Dining YoY growth2.2%Slowed from 2.9% in March, but remained more resilient than other categories.
• Gold and jewelry YoY growth-21.3%March was +11.7%; the report believes the swing was linked to gold price volatility.
• Electronics and appliances YoY growth-15.1%The decline widened from around -5% in March, reflecting fading subsidy effects.
• Home furnishings YoY growth-10.4%March was -8.7%; still weighed down by weak property-related demand.
• Food and beverage YoY growth5.4%Slowed further from 9.0% in March.
• Alcohol and tobacco YoY growth11.7%Accelerated from 7.7% in March and was one of the few improving categories within food and beverage.

Impact & implications

For asset allocation, the report suggests that China consumer sectors lack a strong near-term recovery catalyst, with discretionary consumption and property-chain-related categories still under pressure. The firm is paying more attention to supply rebalancing and demand improvement, the recovery of offline consumption, and individual names with company-specific drivers and attractive risk/reward.

Risks

• Consumer sentiment remains weak, causing May and subsequent retail data to recover less than expected.
• Discretionary categories continue to weigh on overall retail sales, especially gold and jewelry, electronics and appliances, and home furnishings.
• As subsidy effects fade, demand for electronics and appliances may weaken further.
• Weak property-related demand continues to constrain home and durable goods consumption.
• High bases and base resets may increase volatility in category-level YoY data and make interpretation more difficult.

What to watch

• Whether May retail sales extend the slowdown seen in April.
• Consumer confidence and offline foot traffic recovery after the Labor Day holiday.
• Whether merchandise retail can recover from negative YoY growth.
• Whether dining growth can continue to show relative resilience.
• Whether discretionary categories such as gold and jewelry, electronics and appliances, and home furnishings can stabilize.
• Operating data from companies tied to supply rebalancing and offline consumption.