August data on retail trade, industrial production and RRR reduction

BEIJING — China’s retail sales and industrial production accelerated in August with better-than-expected growth, according to data from the National Bureau of Statistics released Friday.

Retail sales rose 4.6% in August from a year ago, beating the 3% expected by a Reuters poll. The rise was also faster than the 2.5% year-on-year pace recorded in July.

Industrial production rose 4.5% in August from a year ago, better than the 3.9% expected and faster than the 3.7% increase reported for July.

Investment in fixed assets, however, increased by 3.2% year-on-year in August on an annual basis. That fell short of expectations for a 3.3% increase and was slower than the 3.4% pace reported in July.

This figure was penalized by a more pronounced drop in real estate investments and a slowdown in infrastructure investments. Only the manufacturing sector saw the pace of investment accelerate.

The urban unemployment rate for cities was little changed, at 5.2%. The statistics office also did not report the youth unemployment rate. It announced last month that it would stop publishing data on the unemployment rate for young people aged 16 to 24. The office said it was reevaluating its methodology and would resume publications at an unspecified date.

China’s economic rebound from the pandemic has slowed since the second quarter, hampered by the real estate crisis. Exports, another key driver of China’s economy, have also fallen as global demand for Chinese goods declines.

The statistics office’s statement described the August data as showing “marginal improvement.”

“The national economy has shown good recovery momentum with high-quality development that has achieved solid progress and accumulated positive factors,” the statistics bureau statement said. “However, we must be aware that many unstable and uncertain factors in the external environment still exist.”

The People’s Bank of China announced Thursday evening that it would reduce the amount of liquidity banks must have on hand by 25 basis points, starting Friday. This is the second reduction in the reserve requirement rate this year since that of March.

In recent weeks, Beijing has announced a series of measures aimed at supporting the real estate market and consumption.

Monetary policy has remained relatively loose compared to aggressive rate hikes in the United States and Europe.

Also effective Friday, the rate of mandatory foreign exchange reserves for financial institutions will be reduced to 4%, compared to 6% previously. The planned reduction was announced two weeks ago.

The central bank also cut other benchmark rates, such as the prime rate for one-year loans.

Moody’s lowered its outlook on China’s real estate sector from stable to negative on Thursday. The company expects sales to decline by about 5% over the next six to 12 months.

“Although the Chinese government has recently strengthened its policy support for the real estate sector, we expect the impact on real estate sales to be short-lived and differentiated by city tiers,” said Cedric Lai, vice president and senior analyst at Moody’s, in a statement. .

Uncertainty about future incomes has kept consumer spending relatively subdued.

China’s consumer price index rose 0.1% year-on-year in August, reversing the decline recorded in July. The core CPI, which excludes food and energy prices, rose at the same rate of 0.8% year-on-year in both months.

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