China’s retail sales recovered to year-on-year growth in August for the first time since January, inspiring some optimism that household consumption would rebound commensurate with industrial production. But employment and services sector activity are still subdued relative to multi-year trend levels. New data concerning business registrations and hiring trends reveal a longer-term decline in employment that started long before 2020, but the COVID-19 outbreak clearly accelerated the trend. Private companies and SMEs appear unwilling to hire amidst weak consumer demand, and demands for consumer-focused stimulus will increase in the coming months.
