Data on industrial production, fixed assets, retail trade

BEIJING – China on Wednesday reported retail sales growth for the first two months of the year was only in line with expectations, while real estate investment continued to fall.

Industrial production for the January-February period rose 2.4%, less than the 2.6% expected by a Reuters poll.

The data “reflects steady rather than accelerated momentum, which also suggests that strong policy support is needed to unleash growth potential,” said Guotai Junan’s Zhou Hao.

As expected, retail sales increased by 3.5%. Most categories within retail sales rose, but large items such as cars and appliances saw sales decline. Online retail sales of physical goods rose 5.3% year over year in the first two months of the year.

Fixed investment rose 5.5%, beating expectations for 4.4% growth.

But within that category, real estate investment fell 5.7% in January and February from a year earlier. This follows a 10% decline in real estate investment over the whole of last year. Infrastructure and manufacturing investment grew at a slower pace than 2022 in the first two months of the year.

“There aren’t many bright spots in today’s data,” said Bruce Pang, JLL’s chief economist and research director for Greater China.

However, he pointed out that February retail sales were little changed from January based on official data. He added that the recent acceleration in investment growth is rather surprising as it had already grown significantly early last year.

Pang expects the housing market to recover later this year, as he said March traditionally marks the peak of housing supply for the year.

Urban unemployment rose to 5.6% in February, up 0.1 percentage point from January, the statistics bureau said. The unemployment rate for young people aged 16-24 remained consistently high at 18.1%, the data showed.

“Due to the impact of the pandemic, China’s economic growth has averaged 4.5% over the past three years, and the pressure on employment is quite severe,” said Fu Linghui, spokeswoman for the Bureau of Statistics and director of the Department of Comprehensive Statistics of the National Economy.

The total number of jobs posted on major recruitment platforms in China fell 23% in the first two months of the year from the same period in 2022, according to Beijing-based BigOne Lab, an alternative data company whose backers include S&P Global.

The data showed that bookings picked up slightly after the Lunar New Year holiday.

BYD was by far the largest recruiter among companies with more than 10,000 employees, the data showed. BigOne Lab found that the Chinese electric-car maker hired more than 400% month-on-month in January, mostly for manufacturing and sales positions.

Wednesday’s official data releases combined January and February figures — as is customary for China’s statistics bureau — to avoid lunar new year bias. The holiday, the biggest of the year in China, marks a travel season of more than a month and can fall in either month depending on the year.

The figures mark the first full months since China ended its strict Covid controls in early December.

Preliminary data and anecdotes suggest that tourism and restaurant dining have recovered, but overall consumer spending remains tepid. Business surveys are now pointing to an increase in manufacturing activity.

“The external environment is even more complex, insufficient demand remains at the forefront and the foundation for an economic recovery is not yet solid,” China’s National Bureau of Statistics said in a release.

The Presidium called for market confidence to be strengthened and for “reasonable volume growth” to be achieved.

Chinese authorities this month announced a growth target of around 5%, which incoming Premier Li Qiang warned would not be easy for the country to achieve.

Asked about the GDP target on Wednesday, Fu said if growth is too slow, it could expose problems in China’s economy and increase risks.

But setting too high a target would not be beneficial for realizing “high-quality development,” Fu said, using Beijing’s term to describe a shift away from the focus on rapid growth.

Exports, a key driver of China’s economy, have slowed sharply. Demand from key trading partners like the US has fallen as those economies face rising inflation and slower growth.

Fu reiterated on Wednesday that price increases in China have remained relatively muted and that the country could reach its target of around 3% inflation this year.

Analysts have said China’s subdued inflation reflects a lack of domestic demand.

Fu also pointedly spoke about the pressure on China’s economy from the global environment, without naming specific countries.

“With high inflation, some economies may further tighten monetary policies, which will further slow global growth,” Fu said, according to a CNBC translation of the Chinese comments.

“At the same time, geopolitics, unilateralism and protectionism are increasing in the international environment, and their pressure on global economic growth will gradually become evident.”