China faced a deeper economic slowdown in August, with key indicators falling short of expectations. Weak domestic demand, along with Beijing’s efforts to reduce industrial overcapacity, is affecting growth.
Retail sales only increased by 3.4% compared to the previous year. Analysts had predicted a 3.9% rise. This number also dropped from July’s 3.7%. Industrial output growth slowed to 5.2%, the lowest since August 2024.
Investment in fixed assets ticked up just 0.5% for the year, below economist forecasts of 1.4%. Notably, real estate investment dropped sharply, declining by 12.9%. While manufacturing investment saw modest growth of 5.1%, overall private sector investment continues to shrink, according to Yuhan Zhang, an economist at the Conference Board’s China Center.
The urban unemployment rate also edged up to 5.3% from 5.2% the previous month. This rise is partly due to recent graduates entering the job market. The statistics bureau highlighted ongoing external uncertainties and risks that impact national economic health.
On a brighter note, retail sales excluding cars showed a growth of 3.7%, with rural consumption outpacing urban growth at 4.6%. Interestingly, sales of jewelry surged 16.8%, and furniture sales climbed 18.6%. However, demand for home appliances and electronics weakened, likely due to decreases in government subsidies for consumer goods.
Market reactions were mixed. The CSI 300 index rose nearly 1% after the data release. Economists like Lisheng Wang from Goldman Sachs anticipate a slow but steady decline in consumption growth moving forward. They suggest careful easing measures may be necessary in the coming months.
As China navigates these challenges, experts urge for balanced policies that promote stability in employment and business confidence, particularly as external pressures continue to mount.
For further details on China’s economic outlook, you can check the National Bureau of Statistics and analyses from financial experts.
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