China's economic slowdown deepens as key indicators miss forecasts
What's the story
China's economic slowdown deepened in August, with key indicators missing expectations. The National Bureau of Statistics (NBS) reported a 3.4% year-on-year increase in retail sales for the month, lower than analysts' estimates of 3.9% growth and a deceleration from July's 3.7% growth rate. The slowdown is attributed to weak domestic demand and Beijing's efforts to curb industrial overcapacity, which has limited output levels across sectors.
Output decline
Industrial output growth slows to 5.2%
China's industrial output growth also slowed to 5.2% in August, down from July's 5.7% increase and the lowest since August 2024, according to LSEG data. The slowdown was unexpected as economists had predicted no change in industrial output from the previous month. This decline highlights the challenges facing China's economy amid ongoing efforts to address overcapacity and boost domestic consumption.
Investment slowdown
Fixed-asset investment grows by just 0.5%
China's fixed-asset investment, reported on a year-to-date basis, grew by just 0.5% in August. This is a sharp decline from the 1.6% growth seen in January to July and lower than economists' expectations of a 1.4% increase. The data also showed that real estate investment continued to decline, falling by 12.9% during the first eight months of this year compared to the same period last year.
Unemployment rise
Urban unemployment rate rises to 5.3%
China's urban unemployment rate rose to 5.3% in August, up from July's 5.2%. The National Bureau of Statistics (NBS) attributed the increase to seasonal factors such as job-seeking graduates entering the labor market. The NBS warned that China's economy still faces multiple risks and challenges amid an unstable external environment. It emphasized the need to implement macro policies, stabilize employment, businesses, and market expectations while deepening reforms in the world's second largest economy.