From an investment perspective, institutional positioning in the consumer sector has remained at historically low levels through the first half of 2026, according to a recent analysis from Morgan Stanley Investment Management. This low ownership, combined with a favorable chip structure, suggests the sector is well-positioned for a potential rebound. Additionally, a significant portion of stocks within the broad consumer space now exhibit dividend-paying characteristics, making the sector increasingly attractive for allocation amidst a broader market style rebalancing.
Looking at interim reports from representative industries like baijiu, the sector shows continued earnings clearing and further risk release, which is building momentum for a potential recovery. This dynamic is enhancing the risk-reward profile for consumer investments. Beyond traditional consumption's recovery potential, the policy-supported new consumption sectors are displaying strong growth trends and healthy business momentum, potentially offering fresh avenues for institutions to uncover and position in promising stocks.
Data from the National Bureau of Statistics shows that July's total retail sales of consumer goods grew 0.6% year-on-year, a slowdown from June's 1.0% increase. Excluding automobiles, retail sales rose 2.5% year-on-year in July, compared to a 3.0% gain in June. Sales from units above a designated size fell 3.4% year-on-year, deepening from June's 2.0% decline. This indicates a return to more subdued activity in July, following a relatively stronger performance in June.
From January to July, national online retail sales of goods and services reached 11.7214 trillion yuan, up 4.8% year-on-year, a slight deceleration from the 5.2% growth seen in the first half. Within this, online retail sales of goods totaled 7.3965 trillion yuan, growing 4.6% year-on-year (compared to 4.8% in the first half), accounting for 25.7% of total retail sales, down slightly from 25.9% in the first half. By category, online sales of food items increased 16.9%, clothing rose 5.8%, and daily-use goods grew 1.1%. Online services retail sales reached 4.3249 trillion yuan, up 5.2% year-on-year, slowing from the 6.0% growth in the first half.
Overall, the retail data indicates the broad consumer market remains in a state of bottoming and awaiting recovery. However, structural bright spots are emerging within the sector. For instance, the catering industry is maintaining steady growth, the decline in home appliance sales is narrowing, and the pharmaceutical category continues to show resilience. While sub-sectors tied to the real estate chain are under pressure from the property market downturn and the withdrawal of national subsidies, the pace of their decline has not accelerated further.
Looking ahead, the potential for sustained improvement in retail sales data exists as the base effect becomes more favorable. On the policy front, there is also a push for continued support. Recently, the State Council approved the "15th Five-Year Plan for Expanding Consumption," which includes 28 key measures. The plan aims to increase total retail sales of consumer goods to 60 trillion yuan by 2030, an implicit compound annual growth rate of 3.7% from the 50.1 trillion yuan recorded in 2025. It also targets a steady increase in the share of per capita service consumption expenditure, signaling an ongoing upgrade in the consumption structure. A significant highlight of the plan is its strong emphasis on service consumption, new consumption models, and "AI + consumption" initiatives, which are expected to serve as new growth drivers for overall consumer spending in the future.