China’s leisure spending remains drag on growth amid recovery

China’s hotels and restaurants, one of the hardest-hit sectors of the economy during the coronavirus pandemic, remained a significant drag on growth in the third quarter even as the recovery gained momentum.

Output in the sector fell 5.1% from a year ago, the statistics bureau said Tuesday in a supplemental report on gross domestic product. That was smaller than the 18% decline in the second quarter. For the first nine months of the year, the sector’s output was down 19.1% compared to the same period in 2019.

Gross domestic product data released Monday showed consumption in China continued to improve in September as virus-related restrictions eased further and consumer confidence picked up. However, spending hasn’t returned to pre-Covid levels, with retail sales in the first nine months of the year down about 7% compared with the same period last year.

Leasing and commercial services was the worst performer last quarter, declining 6.9% from a year ago. The information technology sector continued to outperform, rising 18.8%.

Growth in the construction sector remained solid, rising 8.1% in the quarter from a year ago, reflecting strong credit support from the government to boost infrastructure and a buoyant property market.