China factory output, retail sales slows further
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The news: China's industrial output growth slowed to a five-month low in August, while retail sales and new home prices weakened further, bolstering the case for an aggressive stimulus to shore up the economy.
The numbers: Industrial output in August expanded 4.5% year on year, slowing from the 5.1% pace in July and marking the slowest growth since March, data from China’s National Bureau of Statistics (NBS) showed on Saturday. That missed analyst expectations for 4.8% growth.
Retail sales, a key gauge of consumption, rose only 2.1% in August despite the summer travel peak, decelerating from a 2.7% increase in July. Analysts had expected retail sales, which have been anaemic this year, to grow 2.5%.
China's oil refinery output also fell for a fifth month while crude steel output in August fell 6.1% from July, suggesting disappointing demand.
The context: The sluggish data echoed soft bank lending figures on Friday, underscoring weak growth momentum in the world's second-largest economy during the September quarter.
Faltering Chinese economic activity has already prompted global brokerages to scale back their 2024 China growth forecasts to below the government's official target of around 5%. The economy grew by 4.7% in the second quarter.
President Xi Jinping urged authorities earlier in the week to strive to achieve the country's annual economic and social development goals, amid expectations that more steps are needed to bolster a flagging economic recovery.
The protracted property slump has led to Chinese consumers cutting back on spending. China's new home prices fell at the fastest pace in more than nine years in August. Only two of 70 surveyed cities reported home prices gains both in monthly and annual terms in August.
While Beijing has ramped up efforts to rescue the housing market, many analysts say much more aggressive steps are needed to help debt-laden developers and encourage would-be home buyers back to the market.
The source: Reuters
