Investment, factory output in China cools
More intervention in store
GROWTH in China’s investment and factory output missed forecasts in August, pointing to a further cooling in the world’s second-largest economy that will likely prompt the government to roll out more support measures.
The downbeat data came on the heels of weak trade and inflation readings, raising the chances that third-quarter economic growth may dip below 7 percent for the first time since the global crisis.
Fears of a China-led global economic slowdown have roiled global markets in recent weeks, prompting speculation that the US central bank may hold off on raising interest rates later this week.
“The pace of slowdown in fixed-asset investment is relatively fast – dragged by the property sector, while the factory sector remains sluggish,” said Zhou Hao, a senior economist at Commerzbank in Singapore.
August power output, for example, was up just 1 percent year on year, and production of key industrial commodities such as steel and coal weakened.
Growth in China’s fixedasset investment, one of the crucial drivers of the economy, slowed to 10.9 percent in the first eight months of 2015 – the weakest pace in almost 15 years, data from the National Bureau of Statistics showed yesterday.
Factory output also was weaker than expected, rising 6.1 percent in August from a year earlier.
Markets had expected a 6.4 percent increase, compared with July’s 6 percent.
Annual growth in China’s property investment also continued to cool, slowing to 3.5 percent in the first eight months, the weakest since early 2009, from 4.3 percent in January to July.
Huge overhang
While home sales and prices were slowly recovering from a slump last year – the area of property sold rose at a slightly faster pace of 7.2 percent in January to August – analysts said it would take time for developers to work off a huge overhang of unsold houses and a sharp fall-off in new construction would continue to dampen demand for materials from cement to steel.
Sales of earth excavators had fallen 33 percent in August from a year earlier, hitting heavy machinery makers such as China’s Sany and US heavyweight Caterpillar, Bank of America Merrill Lynch said in a note last week.
“The property sector is the biggest drag on China’s economy,” said Yu Pingkang, the chief economist at Huatai Securities in Shenzhen.
Retail sales were the lone positive surprise, growing 10.8 percent in August from a year earlier, above forecasts of 10.5 percent, the same as July.
But the increase did not appear to jibe with recent reports from local and foreign firms in China of slowing sales.
Chinese e-commerce giant Alibaba, which dominates online sales in the country, last week lowered its sales forecasts in a fresh signal that the economic slowdown is taking a bite out of consumer spending.
Vehicle sales fell 3 percent in August from a year earlier, the China Association of Automobile Manufacturers said.
Data last week showed that China’s manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled, signalling stubborn deflationary risks in the economy and adding to expectations of further stimulus measures.
Imports tumbled more than expected while exports shrank again. China’s surprise yuan devaluation last month and a plunge in its stock markets since June have fuelled fears of more shocks to the economy. –
7% A dip below this growth figure is now expected