Factory output, retail sales beat expectations in firm 2024 start 7%
China’s factory output and retail sales beat expectations in the January-February period, marking a solid start for 2024 and offering some relief to policymakers.
Yesterday’s data join recent better-thanexpected exports and consumer inflation indicators, providing an early boost to China’s hopes of reaching what analysts have described as an ambitious 5 percent GDP growth target for this year.
“China’s activity data broadly stabilized at the start of the year. But there are still reasons to think some of the strength could be one-off,” said Louise Loo, China economist at Oxford Economics.
Industrial output rose 7 percent in the first two months of the year, data released by the National Bureau of Statistics showed yesterday, above expectations for a 5 percent increase in a Reuters poll of analysts and faster than the 6.8 percent gain seen in December. It also marked the quickest growth in almost two years.
Retail sales, a gauge of consumption, rose 5.5 percent, slowing from a 7.4 percent increase in December but beating an expected 5.2 percent gain.
The eight-day Lunar New Year holiday in February saw a solid return of travel, which supported revenue of tourism and hospitality sectors, leading to a 3 percent rise in oil refinery throughput amid strong demand for transport fuels.
The NBS publishes combined January and February industrial output and retail sales data to smooth out distortions caused by the shifting timing of the Lunar New Year.
“Consumers were buoyed temporarily by festivities-related spending at the start of the year. In the absence of decisive consumption-related stimulus this year,
Industrial output rose 7 percent in the first two months of the year, data released by the National Bureau of Statistics showed yesterday, above expectations for a 5 percent increase in a Reuters poll of analysts and faster than the 6.8 percent growth seen in December. we think it would be difficult to sustain a robust consumer spending pace this year,” Oxford’s Loo said.
Loo’s cautious comments reflect broader consensus among China watchers that China has its work cut out in achieving its 2024 economic growth target of “around 5 percent.” While the goal was similar to 2023, analysts note last year had a lower base effect due to COVID curbs in 2022.
Investors were relieved by the betterthan-expected data, with Asian shares firming and Chinese blue chips up.
China’s investment in property development fell 9 percent year on year to 1.1842 trillion yuan (US$167 billion) in the first two months of 2024.
Investment in the sector maintained a falling trend as sales of newly built property also fell 20.5 percent year on year in terms of floor area to 113.69 million square meters in the same period.
In terms of value, sales of newly built property fell 29.3 percent annually to 1.0566 trillion yuan, the data showed.
On the brighter side, fixed asset investment expanded 4.2 percent in the first two months on-year, versus expectations for a 3.2 percent rise. It grew 3 percent in the whole of 2023.
Notably, private investment grew 0.4 percent in the period, reversing the decline of 0.4 percent in 2023.
The total value of imports and exports of goods was 6.61 trillion yuan, up by 8.7 percent year on year.
The job market, another area closely watched by authorities and investors, showed mixed results.
The nationwide jobless rate rose to 5.3 percent in February from 5.2 percent in January, which NBS spokesperson Liu Aihua ascribed to seasonal factors linked to the Lunar New Year.
In 2024, China aims to create over 12 million jobs in urban areas and keep the urban unemployment rate at about 5.5 percent. Favorable factors for stable employment are accumulating for the next stage, Liu said, highlighting the rise in job opportunities in emerging industries and the strengthening of policy support for employment promotion.
“The further recovery of the economy, especially the service sector, and the accelerated transformation of growth drivers will boost employment growth in fields like digital economy, green economy and silver economy,” she said.
Overall, the national economy continued to recover and improve in January and February as various macroeconomic policies took effect, Liu said.
However, she noted that it is also important to recognize that the complexity, severity and uncertainty of the external environment have increased, the issue of insufficient domestic demand remains, and therefore, the foundation for the sustained recovery and improvement of the economy still needs to be consolidated.
(Agencies)