Growth in China’s industrial output fell to a 17-year low in the first two months of the year and the jobless rate rose, pointing to further weakness in the world’s second-biggest economy that is likely to trigger more support measures from Beijing, Trend reports referring to Reuters.
But a mixed bag of major data on Thursday also showed property investment was picking up, while overall retail sales were sluggish but steady, suggesting the economy is not in the midst of a sharper slowdown.
China is ramping up assistance for the economy as 2019 growth looks set to plumb 29-year lows, but support measures are taking time to kick in. Most analysts believe activity may not convincingly stabilise until the middle of the year.
Premier Li Keqiang last week announced hundreds of billions of dollars in additional tax cuts and infrastructure spending, even as officials vowed they would not resort to massive stimulus like in the past, which produced swift recoveries in China and strong reflationary pulses worldwide.
“The latest data should partially ease concerns about a sharp slowdown at the start of the year. But the near-term outlook still looks downbeat,” Capital Economics said in a note.
In particular, Capital Economics and others noted that infrastructure investment has not improved as much as hoped after the government began fast-tracking road and rail projects last year, raising the risk of a milder-than-expected bounce in construction when work resumes in warmer weather.
Pressured by weak demand at home and abroad, China’s industrial output rose 5.3 percent in January-February, less than expected and the slowest pace since early 2002. Growth had been expected to cool to 5.5 percent from December’s 5.7 percent.
China combines January and February activity data in an attempt to smooth distortions created by the long Lunar New Year holidays early each year, but some analysts say a clearer picture of the economy’s health may not emerge until first-quarter data is released in April.
If the seasonal distortion was removed, output rose 6.1 percent in the two months, the National Bureau of Statistics said.
China’s own official factory survey, which is seasonally adjusted, showed manufacturing output contracted in February for the first time since January 2009.
Data last week showed exports tumbled the most in three years in February, suggesting U.S. tariffs on Chinese goods and cooling global demand were taking a greater toll.
President Donald Trump said on Wednesday he was in no rush to complete a trade pact with China and insisted that any deal include protection for intellectual property, a major sticking point between the two sides during months of negotiations.
Job shedding by export-oriented companies led to a jump in the unemployment rate last month, said Li Xiru, an official with the statistics bureau.
China’s survey-based jobless rate rose to 5.3 percent in February, from 4.9 percent in December, though it was below the government’s target of 5.5 percent this year.
Many migrant workers also quit their jobs to go home before the holidays, Li said.
Reuters reported in January that some factories in Guangdong - China’s export hub - had shut earlier than usual ahead of the holidays, and some were expected to close for good as the trade war curtailed orders.