BEIJING (Reuters) – China’s industrial output growth unexpectedly slowed to a more than 17-year low in May, while investment also cooled, in the latest sign of weakening demand in the world’s second-largest economy as the United States ramps up trade pressure.
FILE PHOTO: Employees work on a drilling machine production line at a factory in Zhangjiakou, Hebei province, China November 14, 2018. REUTERS/Stringer
Industrial output grew 5.0 percent in May from a year earlier, data from the National Bureau of Statistics showed on Friday, missing analysts’ expectations of 5.5% and well below April’s 5.4%. It was the weakest reading since early 2002.
Fixed-asset investment also grew less than expected, reinforcing expectations that Beijing will need to roll out more growth-boosting measures soon.
Vice Premier Liu He on Thursday stoked expectations of more stimulus as the U.S.-China trade dispute intensifies, urging regulators to do more to boost the economy and saying Beijing has plenty of policy tools it can use.
Despite a slew of support measures since last year, China’s cooling economy is still struggling to get back on firmer footing, and investors fear a longer and costlier trade war between the world’s two largest economies could trigger a global recession.
Friday’s data showed domestic demand remains sluggish, as suggested by weaker-than-expected import and bank lending data over the last week and gloomy May factory surveys.
Fixed-asset investment rose 5.6% in January-May from the same period a year earlier, decelerating from 6.1% tipped in the Reuters poll and 6.1% in January-April.
Private sector fixed-asset investment, which accounts for about 60 percent of total investment in China, also showed signs of losing momentum. It rose 5.3%, compared with a 5.5% rise in the first four months of the year.
Infrastructure investment grew 4.0%, slowing from 4.4%.
Analysts have been closely watching for signs of a rebound in infrastructure investment as Beijing ramps up spending on road, rail and port projects, which would boost construction-related industries from steel mills to cement makers.
Real estate investment, a key economic growth driver, also showed signs of fatigue. It rose 11.2% in the first five months, slowing from 11.9%.
Retail sales bucked the downbeat trend, rising 8.6% in May from a year earlier and picking up from a 7.2% rise in April, which was a 16-year low.
Analysts surveyed by Reuters had expected a rebound to 8.1%, but some said it was likely due to higher inflation rather than any turnaround in weak consumer confidence.
Earlier this week, China’s auto association reported the worst-ever monthly drop in sales in the world’s biggest vehicle market in May as the economy slowed and provinces implemented tougher emission standards.
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Reporting by Stella Qiu and Kevin Yao; Editing by Kim Coghill