Banking giant HSBC on Friday nearly halved its forecast for China’s retail sales growth in 2026, after weak April data underscored pressures in the labour market and property sector, as well as slowing momentum in Beijing’s consumer goods trade-in programme.

The bank cut its forecast to 2.8 per cent from 5.2 per cent projected in March, after official April retail sales data came in below expectations at 0.2 per cent year-on-year growth – the softest reading since late 2022 during the coronavirus pandemic.

Retail sales are an important gauge of consumption. But in a note, HSBC researchers Erin Xin and Taylor Wang wrote that the April data appeared “inconsistent with the recent calls for rebalancing growth towards domestic demand”.

China’s subsidies for the trade-in programme – launched two years ago to stimulate consumption of electronic goods, household appliances and other consumer durables – “appear to be losing momentum both in magnitude and effect”, the authors said.

They added that demand for big-ticket items had slowed because of the trade-in programme’s “high base”, noting that the labour market remained “under pressure” and the property sector “sluggish”.

The purchasing managers’ index and other indicators also pointed to weakness in the job market, while youth unemployment was “still elevated” amid growing concerns that AI could displace some jobs, the researchers said.