BEIJING (Reuters) – China’s industrial output growth slowed to a five-month low in August, while retail sales also weakened further, raising the case for bolder stimulus to shore up the world’s second-largest economy.
The sluggish data released on Saturday contrasted with the robust export growth seen in August, underscoring the uneven nature of China’s economic recovery.
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 the National Bureau of Statistics (NBS) showed on Saturday.
That missed expectations for 4.8% growth in a Reuters poll of 37 analysts.
Retail sales, a key gauge of consumption, rose only 2.1% in August, decelerating from a 2.7% increase in July amid extreme weather and a summer travel peak. Analysts had expected retail sales, which have been anaemic all year, to grow 2.5%.
President Xi Jinping on Thursday urged authorities to strive to achieve the country’s annual economic and social development goals, state media reported, amid expectations more steps are needed to bolster a flagging economic recovery.
Faltering Chinese economic activity has prompted global brokerages to scale back their 2024 China growth forecasts to below the government’s official target of around 5%.
The protracted property slump has prompted Chinese consumers to cut back spending. Some experts have even proposed distributing shopping vouchers to counter the trend.
Premier Li Qiang said last month the country will focus on stimulating consumption and look at measures to boost household income.
A central bank official said last week China still has room to lower the amount of cash banks must hold as reserves while it faces some constraints in cutting interest rates.
Data from the central bank on Friday showed August new yuan loans remained soft.
Fixed asset investment rose 3.4% in the first eight months of 2024 from the same period a year earlier, compared with an expected 3.5% expansion. It grew 3.6% in the January to July period.
Cash-strapped local governments issued bonds at a quicker pace last month for construction of major projects, a move that economists believe could spur investment and offer some short-term relief for the economy.
Meanwhile, the troubled property sector remains a major drag on growth. Property investment in January-August contracted 10.2% from the previous year, unchanged from a 10.2% slide in January-July.
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.
Analysts at Nomura expect bolder measures to be released in the fourth quarter.
