People shopping in Sichuan Province. Photo: AFP / Koki Kataoka / The Yomiuri Shimbun

Retail sales in China cooled further in May, official data showed Wednesday, with pent-up demand easing and analysts pointing to risks from a global chip shortage and a domestic coronavirus resurgence.

The world’s second-largest economy was among the first in the world to bounce back from the pandemic with mass testing and strict lockdowns. 

But with life largely back to normal, the pent-up consumer demand that drove the early days of the recovery is fading.

Retail sales rose 12.4% on-year last month, according to the National Bureau of Statistics – a sharp slowdown from 17.7% growth in April and below the 14.0% forecast in a Bloomberg News poll of analysts.

The National Bureau of Statistics said that although the economy “maintained stable recovery” there were also “uncertainties in the current global economic recovery and epidemic prevention and control.”

“The foundation for sustained recovery of the domestic economy still needs to be consolidated,” it said.

Adding to the weakness in retail sales was a lack of semiconductors that are key components in a number of products including cars, mobile phones, home appliances and computers. 

The supply problems have been caused by several issues including a surge in demand, a US cold snap, a drought in Taiwan and a fire at Japan’s Renesas manufacturer.

May’s spending was the slowest since the start of the year.

Meanwhile, China’s industrial production increased 8.8% on-year, also slower than April and below expectations. 

Several local outbreaks of Covid-19 have prompted new lockdowns and travel restrictions, including a recent flare-up in the key port and industrial center Guangdong.