BEIJING, Sept 14 (Askume) – China’s industrial output growth fell to a five-month low in August and retail sales also declined further, fuelling a sentiment that more stimulus measures are needed to support the world’s second-largest economy.
The weak data released on Saturday contrasted with strong export growth in August and highlighted the unevenness of China’s economic recovery.
Data released by the National Bureau of Statistics on Saturday showed industrial value added rose 4.5% year-on-year in August, slower than the 5.1% increase in July and the lowest growth rate since March.
This was lower than the 4.8% rise forecast in a Askume survey of 37 analysts.
Retail sales, a key indicator of consumption, rose just 2.1% in August, down from a 2.7% increase in July amid poor weather and the summer travel rush. Analysts had expected weak retail sales to rise 2.5% for the full year.
President Xi Jinping on Thursday urged officials to work toward achieving the country’s annual economic and social development goals, state media reported, adding that more measures are expected to be needed to boost a slow economic recovery.
Slowing economic activity in China has caused global brokerage firms to cut their forecasts for China’s 2024 growth rate, which is below the government’s official target of 5%.
The long-running real estate slowdown has prompted Chinese consumers to cut back on spending. Some expertsIssuing shopping vouchers has also been recommended to reverse this trend .
Premier Li Jiajing said last month that the country would focus on stimulating consumption and consider measures to boost household incomes.
Last week, a central bank official said China still had room to reduce the cash held in its banks but faced some hurdles in cutting interest rates.
Data released by the central bank on Friday showed the pace of new RMB loans slowed in August .
Real estate investment grew 3.4% annually in the first eight months of 2024, while the projected growth was 3.5%. It rose 3.6% from January to July.
Last month, cash-strapped local governments quickly issued bonds to fund major construction projects. Economists believe this will boost investment and provide some short-term relief to the economy.
Meanwhile, the troubled real estate sector remains a major drag on economic growth. From January to August, investment in real estate development fell 10.2% year-on-year, similar to the 10.2% drop from January to July.
Even as Beijing steps up efforts to rescue the property market, many analysts say more aggressive measures are needed to help debt-ridden developers and lure potential homebuyers back to the market.
Analysts at Nomura expect tougher measures to be taken in the fourth quarter.
