High-rise residential and commercial buildings are being constructed near Dongyu Road, Qiantan, Pudong New Area of Shanghai, China, March 15, 2024.
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BEIJING – China reported economic data for the first two months of the year on Monday that beat analysts’ expectations.
Retail sales rose 5.5%, better than the 5.2% forecast in a Reuters poll, while industrial production rose 7%, compared with estimates of 5% growth.
Fixed investment rose 4.2%, higher than the forecast of 3.2%.
The urban unemployment rate was 5.3% in February.
Online retail sales of physical goods rose 14.4% year-on-year in the first two months of the year.
Investment in real estate fell 9% year-on-year in the first two months of the year. Investment in infrastructure increased by 6.3% during this period, while investment in manufacturing increased by 9.4%.
Economic figures for January and February are usually combined in China to compensate for deviations from the Lunar New Year, which can fall in either month depending on the calendar year. It is the country’s biggest national holiday, with factories and shops closed for at least a week.
This year, the number of domestic tourist trips and holiday receipts increased compared to last year and pre-pandemic numbers from 2019. However, Ting Lu, chief China economist at Nomura, pointed out that “average tourism spending “We were still 9.5% below that per trip.” Pre-pandemic levels in 2019.”
Retail sales did not recover as strongly from the pandemic as many had expected as consumers have become more uncertain about their future income.
New loans missed expectations in February and fell from the previous month, “even after accounting for seasonality,” Goldman Sachs analysts said in a report on Friday.
“Ongoing weakness in real estate transactions and low consumer sentiment could continue to weigh on household borrowing,” the analysts said. “Further easing of monetary policy is needed.”
People’s Bank of China Governor Pan Gongsheng said earlier this month that there was still room to lower the reserve ratio, or the amount of cash banks must hold.
Goldman expects this ratio to be cut by 25 basis points in the second quarter of this year and the fourth quarter.
Real estate, which accounts for a significant portion of household wealth, has slumped in recent years after Beijing cracked down on developers’ heavy reliance on debt for growth.
The average property price for 70 major Chinese cities fell 4.5% on a seasonally adjusted basis in February from January and fell 4.5% on an annual basis, according to Goldman Sachs analysis, which uses a weighted average of official figures.
That’s sharper than the 3.5% month-on-month decline in home prices in January, Goldman Sachs said.
“Our high-frequency tracker suggests that new home transaction volumes have declined by 53.2% across 30 cities. [year-on-year] In early March after adjustment to the lunar calendar base,” the analysts said in a report.
During an annual parliamentary session that ended last week, Chinese authorities did not announce any significant new support measures for the huge real estate sector.
Instead, Beijing emphasized the country’s focus on developing manufacturing and technological capabilities.
Data from earlier this month showed China’s exports rose 7.1% in U.S. dollar terms in January and February, beating expectations for a 1.9% rise.
Imports rose 3.5% in the period, also exceeding the Reuters forecast of 1.5% growth.
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2024-03-18 02:12:20
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