Annual growth in China's retail sales and industrial output missed estimates in August, prompting expectations that the country will pursue more stimulus measures in a bid to shore up its slowing economy.
Retail sales grew by 7.5% year over year in August to 3.39 trillion yuan, slowing from a 7.6% increase in July and missing the 8.1% consensus estimate of economists polled by Econoday. From January to August, retail sales rose 8.2% in annual terms to 26.22 trillion yuan, with online sales increasing 16.8% to 6.44 trillion yuan, data from the National Bureau of Statistics showed.
Industrial output in the country rose 4.4% annually in August, 0.4 percentage points slower compared with the previous month and below the Econoday consensus estimate of 5.3% growth. Mining output rose 3.7%, manufacturing increased 4.3% and high-tech manufacturing output growth accelerated by 1.7 percentage points to 6.1% annually in August.
In the January-August period, China's fixed asset investment increased 5.5% year over year to 40.06 trillion yuan, 0.2 percentage points lower than the January-July period. Investment for real estate development increased 10.5%, infrastructure investment rose 4.2% and investment by the private sector was up 4.9% annually from January to August. Investment in the primary sector was down 3.4% year over year.
"The continued slowdown in activity growth last month suggests that the cyclical moderation we have been anticipating is materializing," said Martin Rasmussen, China economist at Capital Economics, in a note. "What's more, a weaker renminbi is unlikely to fully offset the increasing headwinds from U.S. tariffs and cooling global demand, and we expect a further slowdown in economic activity over the coming year as a result."
Growth in industrial production, capital expenditure and retail sales is unlikely to rebound strongly anytime soon, increasing the chances of further policy easing in the coming months, Rasmussen added.
"The near-term economic outlook remains challenging amid weak global and domestic demand prospects," wrote Tommy Wu of Oxford Economics. "Worryingly, the impact of policy easing on growth has so far been relatively slight. More significant policy easing is needed to stabilize growth and we expect this to materialize."
Meanwhile, in an interview with Russian media, Chinese Premier Li Keqiang acknowledged the downward pressure on the economy due to the global growth slowdown and protectionism, among other things, and said it is "very difficult" for China to maintain growth at 6% or above given the current situation, Reuters reported.
The People's Bank of China's latest reserve requirement ratio deduction of 0.5 percentage points takes effect Sept. 16.
As of Sept. 13, US$1 was equivalent to 7.08 Chinese yuan.
