BEIJING (Reuters) – China’s industrial output and retail sales grew at a solid pace in August and beat expectations, suggesting that the recent flurry of support measures may be starting to slowly stabilise a stumbling economic recovery.
Industrial output, released on Friday by the National Bureau of Statistics (NBS), rose 4.5% in August from a year earlier, accelerating from the 3.7% pace seen in July and came above expectations for a 3.9% increase in a Reuters poll of analysts. The growth marked the quickest pace since April.
Retail sales, a gauge of consumption, also increased at a faster 4.6% pace in August aided by the summer travel season, and was the quickest growth since May. That compared with a 2.5% increase in July, and an expected 3% increase.
The upbeat data suggest that a flurry of recent measures including property support policies to shore up a faltering economic recovery are starting to bear fruit.
Friday’s data followed better-than-expected bank lending figures, narrowing in the declines of exports and imports as well as easing deflationary pressure.
The country’s passenger vehicle sales also returned to growth in August from a year earlier, as deeper discounts and tax breaks for environmentally friendly and electric vehicles boosted consumer sentiment.
To sustain the recovery momentum, China’s central bank said on Thursday it would cut the amount of cash that banks must hold as reserves for the second time this year to boost liquidity. Earlier in the day, the bank also rolled over maturing medium-term policy loans to inject more liquidity into the finiancial system, while keeping the interest rate unchanged.
But analysts say more fiscal and monetary policy steps are needed as an ailing property sector, high youth unemployment, uncertainty around household consumption and rising Sino-U.S. tensions over trade, technology and geopolitics have raised the bar for a durable economic recovery in the near future.
The once mighty property sector still remains a drag on the $18 trillion economy, with the country’s largest private developer Country Garden the latest to stumble due to liquidity squeeze.
Moody’s on Thursday cut China’s crisis-hit property sector’s outlook to negative from stable, expecting contracted sales to fall by about 5% over the next six to 12 months.
Fixed asset investment expanded 3.2% in the first eight months of 2023 from the same period a year earlier, versus expectations for a 3.3% rise. It grew 3.4% in the first seven months.
An uncertain business climate meant companies remained wary about hiring, but the nationwide survey-based jobless rate improved a touch to 5.2% in August, slightly down from 5.3% in July.
($1 = 7.2765 Chinese yuan renminbi)
(Reporting by Ellen Zhang, Albee Zhang and Joe Cash; Editing by Shri Navaratnam)
