Chinese Economic Performance in August

Investing.com reports that Chinese industrial production and retail sales grew less than expected in August, accompanied by a rise in unemployment.

Industrial Production

Industrial production increased by 4.5% year-on-year in August, according to government data released over the weekend. This was lower than forecasts of 4.5% growth and a decline from the 5.1% increase seen in July.

The figures indicate that factory activity, previously a bright spot in the Chinese economy, is now under pressure due to sluggish local demand and heightened trade restrictions imposed by Western countries. Earlier this year, the U.S. and its allies enacted steep trade tariffs on imports of Chinese electric vehicles, with U.S. officials reportedly preparing additional restrictions.

Retail Sales

Retail sales grew by 2.1% in August, falling short of expectations of 2.5% and down from 2.7% the previous month. This slower growth reflects a further decline in local demand, contributing to a persistent disinflationary trend in China over the last few years.

Employment and Investment

China's unemployment rate rose unexpectedly to 5.3%, up from 5.2%. Additionally, fixed asset investment also increased less than anticipated in August.

The series of weak economic indicators follow previously released data indicating a sustained decline in China's house prices. The ongoing slump in the property market has significantly contributed to China's economic downturn.

Future Outlook

Analysts at ANZ suggested that the weak economic readings are likely to lead to more stimulus promises from Chinese officials. However, they noted that despite the poor data, there is no justification to downgrade ANZ's GDP outlook, which remains at 4.7% for the third quarter.