China April data underscores economy still losing steam

BEIJING Tue May 13, 2014 1:45pm IST

A labourer works inside a factory in Qingdao, Shandong province, February 15, 2014. REUTERS/China Daily/Files

A labourer works inside a factory in Qingdao, Shandong province, February 15, 2014.

Credit: Reuters/China Daily/Files

Related Topics

BEIJING (Reuters) - Chinese investment, retail sales and factory output growth all disappointed in April by hitting multiyear lows, suggesting the world's second-largest economy is still losing steam despite government efforts to shore up activity.

Factory output rose 8.7 percent in April from a year earlier, marking the slowest growth in five years, the National Bureau of Statistics said on Tuesday. The result missed economists' expectations of an 8.9 percent rise.

The lacklustre performance led some analysts to question whether the government may step up efforts to bolster economic growth lest it fall short of the official target of around 7.5 percent.

"Whether the government will take enough measures to lessen the downturn, this is the biggest question for now," said Wei Yao, an economist at Societe Generale in Hong Kong.

"The most concerning number is the fixed-asset investment number," she said. "The number basically tells us the housing downturn has more than offset the investment push from the government so far."

Fixed-asset investment, a key driver of growth, grew 17.3 percent in the first four months of the year compared with the same period last year. That was weaker than expected and the worst showing since December 2001.

Retail sales also missed forecasts by rising 11.9 percent in April from a year earlier, the weakest growth in more than five years.

To shore up economic growth, Beijing has been loosening policy at the margins by lowering taxes, quickening infrastructure investment, and reducing the amount of cash that the smallest banks have to keep at the central bank to encourage freer lending.

But a slowing property market, where revenues for developers are falling even as home prices continue to rise, has heightened the pain of the cooling economy.

Data on Tuesday showed revenues from property sales fell 7.8 percent in the first four of months of the year compared with the same period last year.

Real estate directly affects about 40 other industries in China and is considered a crucial pillar of the economy.

In a sign that China's housing downturn is starting to disconcert authorities, sources told Reuters on Tuesday that the central bank has asked commercial banks to quicken their disbursements of mortgages.

Economists polled by Reuters had forecast retail sales to rise 12.2 percent. Fixed-asset investment for the January-April period was seen up 17.7 percent.

(China economics team; Editing by Chris Gallagher)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

India-Nepal Ties

REUTERS SHOWCASE

Wipro Reaps Profit

Wipro Reaps Profit

Wipro Q1 profit up 30 pct on new contract wins   Full Article 

Monsoon Revives

Monsoon Revives

Monsoon revival keeps rain above average   Full Article 

Tackling Food Prices

Tackling Food Prices

India to free up extra 10 million tonne wheat in open market  Full Article 

Facebook Results

Facebook Results

Facebook beats Wall Street targets, stock hits record high  Full Article 

Struggling Economies

Struggling Economies

Asian economies to struggle on weak export demand - Reuters poll  Full Article 

Mining Roadblock

Mining Roadblock

Coal India's plans for 20 mines hit by land, environment delays  Full Article 

Power Jolt

Power Jolt

UAE's TAQA pulls out of India power plant deal with Jaiprakash  Full Article 

Factory Sector

Factory Sector

China July HSBC flash PMI at 18-month high of 52.0   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage