Chinese retail sales jumped last month, data showed Friday, beating expectations and fuelling hopes that consumers are helping kickstart the world’s second-biggest economy.
Sluggish domestic consumption, an embattled property sector and soft overseas demand for China’s exports have complicated the country’s post-Covid recovery after restrictions were lifted last year.
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The retail data, which also revealed a better-than-expected rise in industrial output, is the latest pointing to a stabilisation and follows a number of stimulus measures by the government.
Retail sales — the main indicator of household consumption that is closely followed by markets — jumped 4.6 percent year-on-year in August, the National Bureau of Statistics (NBS) said.
That marked a big improvement on July’s 2.5 percent and was higher than the three percent forecast in a Bloomberg survey of economists.
Meanwhile, industrial production climbed 4.5 percent on-year, which was also a significant increase from July and more than estimated.
The government in recent weeks announced a series of measures to lift the economy, the latest coming Thursday with the People’s Bank of China cutting the amount of cash lenders need to keep in reserve — a move aimed at freeing up cash for loans.
Authorities have also unveiled tax breaks for households and businesses to support consumption, while taking steps to address the crisis in the crucial property sector.
Several major cities, including Beijing and Shanghai, have relaxed their criteria for mortgage loans, while first-time buyers have been granted renegotiation of their loan rates.
“China’s activity data improved from July’s low point, showing tentative signs that we may be past the trough,” HSBC economists said in a note.
“However, with ongoing headwinds from the property sector and longer term structural challenges such as from local government debt, Beijing will likely need to continue to provide ongoing policy support to build up the recovery momentum.”
While Friday’s data was welcome, some figures highlighted the struggles ahead.
Property prices fell again in August, suggesting the government’s measures were yet to have an effect.
On Thursday, Moody’s downgraded the outlook for China’s property sector from “stable” to “negative”, arguing that the support measures will only have a short-term impact.
And on Friday, state-backed developer Sino-Ocean announced it would suspend payments of offshore debts, the latest company to show signs of trouble.
The unemployment rate for the working population as a whole fell slightly in August to 5.2 percent.
Unemployment data no longer includes a breakdown for 16- to 24-year-olds, after a record high in June of 21.3 percent.
On Friday, NBS spokesman Fu Linghui said the job market for young people has “clearly improved”, but did not provide figures to support that claim.
In China, the unemployment rate is calculated for urban areas only, and therefore gives only a partial picture of the situation.
Fixed capital investment, meanwhile, slowed to 3.2 percent on-year in the first eight months of the year.
That marks the fourth month of decline for the indicator, which reflects spending on property, infrastructure, equipment and machinery — sectors that the government has relied on in the past to stimulate activity.
“Some may be of the view that China’s economy has already bottomed out, but we remain cautious,” wrote Nomura’s Ting Lu in a note.
“We believe that the recent raft of supportive measures in the property sector may not be enough to turn things around, and Beijing still needs to ramp up policy support to deliver a more sustainable recovery.”