China's May factory output slows, retail sales weaken

Business | 16 Jun 2021 4:55 pm

Growth in China's factory output slowed for a third straight month in May, likely weighed down by disruptions caused by coronavirus disease outbreaks in Guangdong, Reuters reports.

Retail sales and investment growth also came in below market expectations, though analysts noted headline readings remain highly distorted by comparisons to the pandemic plunge early last year.

The Chinese economy has largely shaken off the gloom from the coronavirus-induced slump, but officials warn its recovery remains uneven amid challenges including rising raw material prices and global supply chain disruptions, especially a shortage of chips.

Industrial production grew by 8.8 percent in May from a year ago, slower than the 9.8 percent uptick in April, National Bureau of Statistics data showed on Wednesday.

That missed a 9 percent on-year rise forecast by analysts from a Reuters poll.

"This is a normal cyclical slowdown after an economic recovery. In a nutshell, we can see the economic rebound is peaking," said Hao Zhou, senior EM economist Asia, Commerzbank. "The extent of the slowdown in the second half is key. So far, it's still normal and there's still room for the fiscal policy to play a part later in the year."

Retail sales grew by 12.4 percent year-on-year in May, weaker than 13.6 percent growth expected by analysts and down from the 17.7 percent jump seen in April.

Chinese consumer and business confidence has been picking up thanks to pent-up demand and quickening vaccine rollouts, which are also reviving domestic tourism.

Fixed asset investment increased by 15.4 percent in the first five months from the same period a year earlier, versus a forecast 16.9 percent rise, slowing from January-April's 19.9 percent increase.


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