Retail sales over the January-February period grew only 12.3 vs. expectations of 15.0 percent.
The culprit?
There's wide-scale evidence that the government has gone on a big "diet," reducing a lot of its excessive spending on itself.
Check out the chart from Nomura, showing a big year-over-year drop in sales of catering companies, suggesting the government threw far fewer parties for itself.
Nomura
Nomura cites several regional contacts anecdotally confirming that government expenditures are far more subdued than they have been in the past. And this is consistent with the aims of the new Xi Jinping government to reduce government luxury spending and corruption.
In fact, Xi's own behavior gave a big hint that this would be carried out.
From Nomura:
From a local government in middle province, holiday parties were cut this year. One senior executive recently told us that local government officials that they conduct business with now dine out only at local government canteens, so as to off the radar. Various local governments are cutting back on CNY get-together this year. When some local officials travel, they now book less expensive hotels. After Chairman’s Xi’s trip to Guangdong in November where he requested no red carpets/fresh flowers/fruits/snacks and four dishes and one soup only as his meal standard, various government events are now following suit.
That was your big tell, China watchers. When the Chairman declined to have a red carpet or fresh flowers and fruit, that was a sign of things to come.