Industrial output in China surgeS by 7.0% year-on-year during the January-February period

Industrial production in China surged by 7.0 per cent year-on-year during the January-February period, as data released on Monday revealed.

This growth rate represents an acceleration from the 6.8 per cent pace observed in December and exceeded expectations, providing some relief to policymakers and signaling a promising start for the year.

The National Bureau of Statistics (NBS) reported that the figure surpassed forecasts from a Reuters poll of analysts, who had expected a 5.0 per cent increase.

Retail sales, considered a barometer of consumption levels, increased by 5.5 per cent in the first two months of the year, compared to a 7.4 per cent rise in December. Although this growth rate moderated slightly, it still outpaced analysts’ expectations, who had predicted a 5.2 per cent increase, suggesting that consumer spending remains relatively robust despite the deceleration.

Fixed asset investment, a crucial gauge of overall economic activity, expanded by 4.2 per cent during the same period compared to the previous year. This growth rate exceeded expectations for a 3.2 per cent rise and surpassed the 3.0 per cent growth recorded for the entirety of 2023, indicating increased investment sentiment and activity in the early months of 2024.

China’s housing market, which has been experiencing a prolonged downturn, exhibited signs of a moderated decline as the new year commenced, buoyed by government interventions aimed at stabilizing the sector.

Despite this, analysts remain cautious about declaring an end to the downturn prematurely. National Bureau of Statistics (NBS) data revealed that property investment in China decreased by 9.0 per cent year-on-year in the first two months of 2024, an improvement from the 24.0 per cent decline recorded in December 2023.

Property sales also experienced a milder contraction, with sales by floor area registering a 20.5 per cent slide in January-February compared to the previous year, compared to a 23.0 per cent fall in December.

However, official figures from last week indicated that the sector continues to face challenges, as home prices saw a 0.3 per cent month-on-month decline in February, consistent with the trend observed in January.

Nie Wen, an economist at Hwabao Trust, emphasized that despite the slight improvement in property investment, the real estate sector remains on a downward trajectory.