Weak economic data signal Q2 GDP growth below expectations
Print Edition
INDUSTRIAL output growth in May was flat, while investment and retail both slowed, according to National Bureau of Statistics data released yesterday.
The figures added to worries that China’s second-quarter GDP growth may be below expectations.
Factory output growth remained at 6 percent year on year in May, as in April, down from March’s 6.8 percent.
Industrial production accounted for 40.5 percent of China’s total GDP last year, making it one of the leading indicators of economic growth.
Sheng Laiyun, a bureau spokesman, said positive signals had emerged from the stable industrial output expansion as added value growth in the manufacturing industries accelerated and power consumption recovered.
China’s retail sales of consumer goods grew 10 percent year on year in May, versus the 10.1 percent growth for April.
Also, fixed-asset investment growth eased to 9.6 percent year on year in the January-May period, missing market expectations of 10.5 percent, and down from the 10.5 percent growth in the January-April period.
Sheng said car sales in May helped sustain retail figures for that month, and though overall fixed-asset investment slowed, investment in the high-technology and services sector accelerated.
“We think the Chinese economy is overall stable with progress within,” Sheng said at a media briefing, adding that there was still downward pressure from financial and political instability overseas and domestic conflicts amid structural adjustment.
Sheng said the economic outlook for the second quarter was stable as April and May data improved from the first quarter.
Australia and New Zealand Banking Group said yesterday that China may miss its growth target of 6.5 percent due to the slow industrial growth.
“Manufacturing activities have recovered as compared with the average in the first quarter. By maintaining the current momentum, the secondary industry can grow by 0.2 percentage points higher than the first quarter’s 5.8 percent,” it said. “If fixed-asset investment declines further in June, the 6.5 percent threshold is at risk.”
China will try to contain the downside risk to growth through a more aggressive fiscal policy, it said, though large monetary stimulus is unlikely as the leadership will still place great emphasis on economic rebalancing.
The bureau’s figures were in line with an array of economic indicators showing a mixed picture of the economy.
Consumer inflation unexpectedly cooled to 2 percent in May, while the decline in factory prices narrowed to 2.8 percent from April’s 3.4 percent.
Exports in yuan-denominated terms rose more slowly in May at 1.2 percent year on year, while imports gained 5.1 percent, rebounding from April’s decline of 5.7 percent.
The official Purchasing Managers’ Index for May was flat at 50.1, indicating expansion in manufacturing activity.
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