China’s economic activity reduced further in August, as the COVID-19 outbreaks and stringent control measures hit consumer demand and factory production.
According to data released Wednesday by the National Bureau of Statistics, retail sales, a key gauge of China’s consumption, increased by 2.5% from a year earlier in August. Notably, it’s down sharply from July’s 8.5% growth. Besides, the result was much lower than the 6.3% growth anticipated by economists polled by The Wall Street Journal.
Chinese authorities announced that slower growth was caused by coronavirus outbreaks and flooding. As we know, it stopped individuals from traveling.
The second-largest economy has pursued an aggressive zero-Covid strategy to stop new COVID-19 cases, locking down cities, canceling flights, and suspending some port operations.
China imposed stringent new curbs on travel to squash an outbreak of the delta strain from late July. Restaurant & catering sales dipped 4.5% in August from a year ago after gaining 14.3% in August. Asian giant quickly brought the outbreak under control. A new virus cluster has developed in southern China in the previous month, suggesting consumers will continue to remain cautious.
Furthermore, industrial production in August surged 5.3% from a year earlier, decelerating from a 6.4% rise in July. It was below the 5.6% pace expected by the surveyed economists.
New housing projects dropped by 3.2% during the first eight months of 2021
China’s fixed-asset investment (FAI) boosted by 8.9% in the first eight month of 2021, compared with the 10.3% pace registered in June-July period. Economists anticipated fixed-asset investment to gain 8.8%.
According to the statistics bureau, China’s urban surveyed unemployment rate stayed intact at 5.1% in August.
Moreover, new housing projects, as measured by floor space, dropped by 3.2% during the first eight months of 2021.
China’s 10-year government bond futures soared for the first time in three days as the weak data revived anticipations for policy easing. The CSI 300 Index pared its decline slightly after the data dump, down 0.3%.
China’s government is refraining from broad stimulus in order to support the economy. Notably, policymakers are ramping up targeted programs for smaller businesses and pledging fiscal support through the use of local government bonds. The People’s Bank of China kept its measured policy approach Wednesday.
Many economists anticipate the PBOC will cut the reserve requirement ratio (RRR) for banks again in coming months following a surprise reduction in July.
COMMENTS