China’s economic momentum weakened further in August as key indicators fell short of forecasts, reflecting persistent softness in domestic demand and the impact of government efforts to reduce industrial overcapacity. n nRetail sales rose 3.4% year-on-year, according to the National Bureau of Statistics, below the 3.9% increase anticipated by analysts in a Reuters survey and down from 3.7% in July. The industrial production index grew by 5.2%, marking the slowest pace since August 2024 and a decline from the previous month’s 5.7% expansion. Market expectations had predicted stable growth. n nYear-to-date fixed-asset investment increased by only 0.5%, a significant drop from the 1.6% rise recorded through July and below the 1.4% growth economists had projected. Within this, real estate investment declined by 12.9% over the first eight months of the year, deepening the sector’s downturn. In contrast, manufacturing investment rose 5.1% and utilities—including electricity, fuel, and water—grew 18.8% compared to the same period last year. n nYuhan Zhang, principal economist at The Conference Board’s China Center, noted that manufacturing investment has shown uneven progress, driven partly by state-led initiatives in infrastructure and high-tech industries, while private real estate activity remains subdued. n nThe urban jobless rate, based on a household survey, edged up to 5.3% in August from 5.2% in July, a shift the statistics bureau attributed to the influx of new graduates into the labor market. n nIn a statement, the bureau cautioned about ongoing external uncertainties and multiple challenges facing economic development. It emphasized the need to strengthen macroeconomic policies, stabilize employment, support businesses, and maintain market confidence through reforms and innovation. n nService-related spending showed resilience, with travel, leisure, and transportation leading gains, suggesting a gradual rebalancing of consumption toward non-goods sectors. Excluding automobiles, retail sales in services and other categories climbed 3.7% year-on-year. Rural consumption outpaced urban areas, rising 4.6% in August. n nSpokesperson Fu Linghui stated it was too early to determine if consumer price trends had reached a turning point, noting that inflation could remain volatile. The consumer price index dropped 0.4% annually, exceeding expectations, while producer prices continued to contract for a third consecutive year. n nFu highlighted risks from imported inflation, including a weaker yuan, higher global commodity prices, and potential tariff increases. He also pointed to policy efforts aimed at curbing destructive price competition—referred to as ‘anti-involution’ measures—that could eventually benefit consumer pricing stability. n nAmong the strongest-performing categories, jewelry sales surged 16.8%, sports and entertainment products jumped 16.9%, and furniture sales climbed 18.6% compared to the prior year. Petroleum, tobacco, and alcohol products were among the weakest performers. n nFinancial markets reacted mildly, with the CSI 300 index rising nearly 1% following the data release. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said the slowdown was anticipated, as earlier boosts from exports and fiscal stimulus had faded. He suggested Beijing might adopt slightly more supportive policies, though a major stimulus package appears unlikely unless growth threatens the official 5% annual target. n— news from CNBC
— News Original —
China’s economy slowdown deepens in August with retail sales, industrial output missing expectations
China ‘s economic slowdown deepened in August with a raft of key indicators missing expectations, as weak domestic demand persisted and Beijing ‘s campaign against industrial overcapacity curbed output. n nRetail sales last month rose 3.4% from a year earlier, data from the National Bureau of Statistics showed Monday, missing analysts ‘ estimates for a 3.9% growth in a Reuters poll and slowing from July ‘s 3.7% growth. n nIndustrial output growth slowed to 5.2% in August, compared to the 5.7% jump in July, marking its weakest level since August 2024, according to LSEG data. Economists had expected the data to be unchanged from the previous month. n nFixed-asset investment, reported on a year-to-date basis, expanded just 0.5%, a sharp slowdown from the 1.6% expansion in the January to July period, and undershooting economists ‘ forecasts for a 1.4% growth. n nWithin that segment, the contraction in real estate investment worsened, slumping 12.9% in the first eight months, government data showed. Investment in the manufacturing and utilities sector — including electricity, fuel and water supplies — increased 5.1% and 18.8% from a year earlier, respectively. n nThe fixed-asset investments in manufacturing have seen “modest and uneven growth,” said Yuhan Zhang, principal economist at think-tank The Conference Board ‘s China Center, citing weak real estate activities from private developers and growth in policy-driven state investment in infrastructure, high-tech and industrial upgrading. n nChina ‘s survey-based urban unemployment rate in August came in at 5.3%, edging higher from 5.2% in the prior month. The statistics bureau attributed the rise in the jobless rate to the graduation season. n n”We should be aware that there are many unstable and uncertain factors in (the) external environment, and national economic development is still confronted with multiple risks and challenges,” the statistics bureau said in an English-language release. n n”We must fully implement macro policies, focus on keeping employment, businesses, market…expectations stable, deepen reform and opening up and innovation, so as to foster steady and healthy economic development.” n nService consumption gained momentum, led by travel, leisure and transport, signaling a gradual shift in spending toward services, Zhang pointed out. n nThe retail sales, excluding automobile consumption, grew 3.7% in August from a year earlier. Consumption growth in rural areas outpaced that in the urban centers, growing 4.6% in August from a year ago. n nThe NBS spokesperson Fu Linghui said in a press conference following the release that it was hard to tell whether consumer inflation had reached an inflection point, while expecting consumer prices to remain volatile. n nChina ‘s consumer price index fell more than expected last month, dipping 0.4% from a year earlier, while a deflation in producer prices persisted for a third year. n nFu acknowledged uncertainty around “imported inflation” — where prices of imported goods may increase because of reasons such as a weakening yuan, rising global commodity prices, and higher tariff rates. He also pointed to support from “anti-involution” policies targeting excessive competition and price wars from manufacturers that would eventually “spill over” to consumer prices. n nAmong the categories that experienced the largest growth, sales of gold, silver and jewelry grew 16.8% in August from a year earlier, while that of sports and entertainment products rose 16.9%, and sales of furniture increased 18.6% from a year ago. n nThe biggest laggards in consumption were petroleum, as well as tobacco and alcohol related products. n nThe mainland ‘s CSI 300 index advanced nearly 1% shortly after the release of China ‘s economic data. n n”The slowdown is not a surprise to the markets,” as investors had already expected growth to weaken in the third quarter, said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, after the boost from exports and Beijing ‘s fiscal support had both faded. n nBeijing ‘s fiscal policy may turn “more supportive on the margin,” but a large stimulus package is unlikely, unless Beijing sees the economy is in danger of missing its 5% growth target, Zhang added.