China reported mixed economic data for April, highlighting a slowdown in consumer spending despite robust industrial activity. According to the National Bureau of Statistics, retail sales rose by 2.3% year-on-year, falling short of the 3.8% increase forecast by a Reuters poll and slower than the 3.1% growth reported in March.
In contrast, industrial production exceeded expectations, growing by 6.7% in April compared to the anticipated 5.5% growth, and showing a marked improvement from 4.5% in March. However, fixed asset investment for the first four months of 2024 rose by 4.2%, missing the expected 4.6% increase.
The real estate sector continued to struggle, with investment declining by 9.8% year-on-year for the first four months of 2024. Both infrastructure and manufacturing investments slowed slightly from March levels. The urban unemployment rate in April remained steady at 5%, with further breakdowns by age to be released soon.
Despite these challenges, retail sales during a recent holiday period from April 29 to May 3 grew by 6.8% year-on-year, according to China’s Ministry of Commerce. Sales of home appliances rose by 7.9%, and automobile sales increased by 4.8%, driven by nationwide trade-in incentives.
“Major indicators of industry, exports, employment, and prices improved overall, with new driving forces maintaining rapid growth,” the statistics bureau stated. However, Bruce Pang at JLL noted that consumer caution remains due to uncertainties about future income, although improving employment data and services consumption could boost retail sales.
The bureau attributed April’s figures to the May 1 Labor Day holiday timing and a high base from last year. A spokeswoman for the bureau, Liu Aihua, emphasized that the real estate sector remains in a period of adjustment.
China also began a six-month program to issue decades-long bonds for strategic projects. Oxford Economics expects the economic impact of these bonds will be felt mainly in the first half of next year, with Liu noting that their issuance could boost market confidence.
April’s data presented a mixed picture for growth. While exports grew by 1.5% year-on-year and imports surged by 8.4%, consumer prices ticked up slightly, and factory-level prices continued to decline. New loan data for April slumped to a two-decade low, reflecting sluggish borrowing demand.
A prolonged slump in the real estate sector persists, with many pre-sold apartments still under construction. In response, more cities have eased housing purchase restrictions to bolster sales.
Officials from the housing ministry, central bank, and financial regulator are set to discuss policies to support home delivery in a press conference. Hang Seng Bank’s chief economist, Dan Wang, expects China’s property market to stabilize by the end of next year, noting the economy’s resilience despite the real estate slump.
