China’s August manufacturing, retail sales did not miss expectations By Reuters

BEIJING (Reuters) – China’s industrial output growth slowed to a five-month low in August, while retail sales fell further, raising the case for bolder stimulus to prop up the world’s second largest economy.

Weak data on Saturday contrasted with robust export growth in August, underscoring the uneven nature of China’s economic recovery.

Industrial production rose 4.5% year-on-year in August, slowing from a 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 a 4.8 percent rise in a Reuters poll of 37 analysts.

Retail sales, a key indicator of consumption, rose just 2.1 percent in August, down from a 2.7 percent increase in July, amid extreme weather and a summer travel peak. Analysts had expected retail sales, which have been anemic all year, to rise 2.5%.

President Xi Jinping on Thursday called on authorities to make efforts to meet the country’s annual economic and social development targets, state media reported, amid expectations that more steps are needed to shore up a sluggish economic recovery.

Weakened Chinese economic activity prompted global brokerages to cut their 2024 China growth forecasts below the government’s official target of around 5%.

The prolonged property slump has prompted Chinese consumers to cut back on spending. Some experts have even proposed handing out shopping vouchers to counter the trend.

Premier Li Qiang said last month that the country would focus on boosting consumption and consider measures to boost household incomes.

A central bank official said last week that China still has room to reduce the amount of cash banks must hold as reserves, while facing some constraints in cutting interest rates.

Data from the central bank on Friday showed that new yuan lending remained weak in August.

Investment in fixed assets rose 3.4% in the first eight months of 2024 from the same period a year earlier, compared with an expected increase of 3.5%. It increased by 3.6% in the January-July period.

Cash-strapped local governments issued bonds at a faster pace last month to build major projects, a move economists believe could spur investment and provide some short-term relief for the economy.

Meanwhile, the troubled real estate sector remains a major driver for growth. Real estate investment in January-August contracted by 10.2% year-on-year, unchanged from a 10.2% decline in January-July.

While Beijing has stepped 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 homebuyers back into the market.

Analysts at Nomura expect bolder measures to be rolled out in the fourth quarter.