What are the new characteristics of the rebound in service consumption after a year?

First, the rebound in service consumption has continued for about a year, and starting from early 2024, the gap in growth rates between service consumption and goods consumption is gradually disappearing.

In 2023, service retail grew by 20% year-on-year, significantly higher than the 5.8% growth rate of goods retail. In 2024, service retail is expected to grow by 6.2% year-on-year, exceeding goods retail by 3 percentage points.

The old-for-new policy was introduced in 2024, and since the fourth quarter, the growth rate of goods consumption has been continuously rising. From January to April 2025, the old-for-new policy is expected to drive consumption growth by about 1.5 percentage points.

In January to April 2015, the growth rate of goods retail was 4.7%, and the growth rate of service retail was 5.1%, with almost no difference between the two, while dining consumption fell to 4.8%. In March, the growth rate of goods retail briefly surpassed that of service retail.

Second, within service consumption, the fastest recovery is seen in cultural entertainment and dining services.

In 2023, the year-on-year growth rates for cultural entertainment and dining services were 39.2% and 27.6%, respectively, with their shares of cash consumption by residents rising from 3% and 7.5% in 2022 to 3.7% and 8.7%.

In 2024, the recovery trend for cultural entertainment and dining services continues. Based on resident expenditure data estimates, their year-on-year growth rates are expected to be 10.6% and 8.4%, with their shares of cash consumption by residents rising to 3.9% and 8.9%.

Although the recovery speed of cultural entertainment consumption is the fastest, the degree of recovery remains the lowest, currently only reaching 107% of 2019 levels, while service consumption expenditure has recovered to 136% of 2019 levels, indicating that there is still room for recovery in cultural entertainment consumption.

Third, the recovery speed of tourism consumption among urban residents is faster than that of rural residents.

In 2024, the number of urban residents traveling and tourism revenue have recovered to 97.7% and 103.8% of 2019 levels, respectively, higher than the recovery levels of rural residents at 81.4% and 84.7%. The number of rural residents traveling and their expenditures are significantly lower than the 2019 levels, indicating that there is still room for recovery Compared to tourism consumption, rural residents are more willing to spend on food, clothing, daily necessities, and services. In 2024, rural residents' expenditures on related goods are expected to grow by 5.9%, 4.9%, and 5.2% year-on-year, which is higher than the expenditure growth rates of urban residents at 4.9%, 1.8%, and -0.4%.

Fourth, tourism consumption shows a significant concentration during holidays.

Measured by the proportion of tourists and tourism revenue during the May Day, National Day, and Spring Festival holidays to the total number of tourists and total revenue for the year, the proportions in 2018 and 2019 were both 22% and 23%. In 2020, this indicator rose significantly to 36% and 35%. Although it fell back to 26% and 27% in 2024, it is still significantly higher than the pre-pandemic levels.

Fifth, per capita tourism consumption expenditure rapidly recovered to 90% of the same period in 2019 in 2023, then entered a period of fluctuation.

In 2023, during the May Day holiday, per capita tourism consumption expenditure recovered to 89% of 2019 levels, but by 2025, it remained at 90% of 2019 levels, entering a plateau after reaching 90%.

Overseas experience also shows that after service consumption fills the gap, the growth rate tends to stabilize. For example, U.S. dining and accommodation consumption took 2 years to fill the gap, stabilizing at around 1% growth; leisure service consumption took 2.5 years to fill the gap, stabilizing at around 3% growth.

Sixth, similar to the retail sales data, the growth rate of dining consumption above the threshold is significantly lower than that below the threshold.

In 2024, dining consumption below the threshold is expected to grow by 6.3% year-on-year, significantly higher than the 3% year-on-year growth of dining consumption above the threshold, driving the overall dining growth rate up to 5.3%.

However, starting from the end of 2024, the growth rate of dining consumption above the threshold has significantly rebounded, possibly related to dining subsidies in many regions, as restaurants participating in dining vouchers often have larger revenue scales.

Seventh, the deeper the dining consumption, the better the performance.

In 2024, the dining growth rates in provinces and cities such as Shandong, Jiangsu, Sichuan, Hubei, Hunan, and Chongqing are above 6.9%, while Guangdong's dining sales growth rate is only 0.2%. Beijing and Shanghai both experienced negative growth in dining consumption, with Beijing's dining consumption down 4.9% year-on-year, and Shanghai's dining and accommodation declining by 5.4% (Shanghai did not separately disclose dining data) Data from listed catering companies also shows the same results. Taking tea drinks as an example, Mixue Ice City has a store proportion of 57.4% in third-tier cities and below, planning to open 4,978 new stores in these cities in 2024, driving a profit growth of 39.8% to 4.45 billion yuan in 2024. Gu Ming has a store proportion of 51.4% in third-tier cities and below, with a profit growth of 36.2% in 2024. In contrast, NAYUKI's business layout is mainly in first-tier and new first-tier cities, with a proportion reaching 70.6% in 2024, while the proportion in third-tier cities and below is only 9.6%, resulting in a revenue decline of 4.7% and a profit loss of 920 million yuan in 2024.

Author of this article: Song Xuetao from Guojin Macro, Source: Xuetao Macro Notes, Original title: "New Characteristics of Service Consumption (Guojin Macro Sun Yongle)"

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