Chinese retail sales and industrial output jump

by | Sep 15, 2023

(Sharecast News) – A raft of data from China out on Friday showed signs that the world’s second largest economy may be stabilising after months of weaker-than-expected economic indicators.
Both retail sales and industrial output smashed expectations in August, though economists were quick to point out that this is unlikely the start of a significant recovery as Beijing still grapples with a property crisis that some fear could spill over into the wider financial sector.

In fact, the People’s Bank of China made another cut to the reserve requirement ratio – the amount of cash that banks need to have on hand – as it continues to attempt to prop up the real estate market.

The annual rate of Chinese retail sales growth jumped to 4.6% last month, up from 2.5% in July and well ahead of the 3% gain expected by analysts. The data showed encouraging signs of improvements in discretionary spending in particular, with sales growth in things like cosmetics, smartphones and jewellery all ticking up.

However, Duncan Wrigley, chief China economist at Pantheon Macroeconomics, pointed out that September’s data is likely to reflect the impact of heavy rains and flooding in Guangdong.

“The rise in discretionary consumption spending in August is likely related to summer tourism behaviour. We will be looking for this to continue before assessing a significant pick up in confidence,” he said.

Chinese industrial production rose by 4.5% year-on-year in August, after 3.7% growth in July. Economists had expected a figure closer to 3.9%.

However, fixed asset investment growth eased to 3.2%, down from 3.4% the previous month and slightly under the 3.3% forecast. The decline in property investment worsened to -8.8% year-on-year, from -8.5% in July, while infrastructure spending growth slowed to 3.2% from 3.4%.

The People’s Bank of China on Thursday evening cut the RRR by 25 basis points, effectively releasing an estimated 500bn yuan ($69bn) of long-term liquidity into the banking sector. This was the second reduction in the RRR this year after a cut in March.

“We see that RRR cut as aiming to boost banks’ lending capacity and facilitate fiscal stimulus, notably the accelerated issuance of local government special bonds, which has pushed up one-year Chinese government bond yields recently,” said Wrigley from Pantheon Macroeconomics.

Related articles

Recruitment slumps on weaker economic backdrop

Recruitment slumps on weaker economic backdrop

(Sharecast News) - Recruitment fell sharply in November, an industry survey showed on Friday, as economic uncertainty saw employers cut back on hiring. According to the latest UK Jobs Report from KMPG and the Recruitment and Employment Confederation, placements of...

FCA sets out new rules to prevent fully cashless society

FCA sets out new rules to prevent fully cashless society

(Sharecast News) - The Financial Conduct Authority (FCA) has declared that certain banks and building societies will still need to hold cash despite the UK's continuing shift to digital payments. The new rules will ensure that the three million consumers who rely on...

UK house prices rise amid property shortage – Halifax

UK house prices rise amid property shortage – Halifax

(Sharecast News) - UK house prices rose for the second month in a row in November, boosted by a shortage of properties, according to figures released by Halifax on Thursday. House prices rose 0.5% on the month following a 1.2% jump in October and after six consecutive...

Latest Articles

Join our mailing list

Subscribe to our mailing list to receive regular updates!