Retail sales registered an increase of 4.6% in August compared to the same period in the previous year, exceeding the 3% growth estimated by Reuters survey predictions. This also represented an acceleration when compared to the 2.5% rise observed in July. China's National Bureau of Statistics discontinued the report of unemployment rate of individuals aged from 16 to 24 last month. The People's Bank of China reported on Thursday that it will be trimming the mandatory reserves requirement of banks by 0.25% from Friday, which is the second reduction since the one that occurred in March.
In August, China's retail sales and industrial production both achieved higher-than-expected growth, according to data released Friday by the National Bureau of Statistics. There was a 4.6% year-on-year increase in retail sales, surpassing the 3% forecast in a Reuters poll, and an increase in industrial production of 4.5%, better than the 3.9% expected. Fixed asset investment, however, only managed to reach 3.2%, missing expectations of 3.3% and slower than the 3.4% recorded in July; this was primarily attributed to a diminished real estate investment and a decrease in infrastructure investment, while the manufacturing sector experienced an uptick. Fu Linghui, spokesperson for the statistics bureau, said the real estate market was still undergoing a period of "adjustment," citing the declines in sales and investment.
The urban unemployment rate for cities stayed close to 5.2%. The statistics bureau again refrained from releasing the jobless rate for young people in the age range 16 to 24 as it is currently reassessing its methodology. There is no fixed date when the report will resume.China's economic recovery from the pandemic has stalled since the second quarter, with a slump in real estate and waning global demand for Chinese products causing exports to decline.
The statistics bureau release reported that August data indicated a "marginal improvement." They expressed that "the national economy is demonstrating a good recovery with high-quality growth gaining its foothold and positive factors gathering." They also pointed out that "it is critical to be mindful of the abundant volatile and unpredictable elements in the external atmosphere."
Physical goods' online sales in retail increased by 7.6% compared to last August, as CNBC found when accessing data through Wind. A 1.1% advance was seen in auto sales. Amongst higher growing categories were cosmetics (9.7%) and communication equipment (8.5%) during that same timeframe. Catering sales also experienced an increase of 12.4%.
On Thursday night, the People's Bank of China declared that it was reducing the amount of funds that banking institutions are obligated to keep on hand by 25 basis points, coming into effect on Friday. This was the second time this year that the reserve requirement ratio has been cut, with the first reduction being in March. In recent weeks, Beijing has also proclaimed a number of initiatives to sustain the housing market and consumption.
Monetary policy has stayed relatively relaxed compared to the assertive rate rises in the U.S. and Europe. Additionally, an abatement in the foreign exchange reserve requirement ratio for financial institutions to 4% from 6% was executed on Friday, as declared two weeks ago. The central bank also trimmed additional benchmark rates, like the one-year loan prime rate.
Moody's changed its outlook on China's property market to negative from stable on Thursday. It predicts that sales could decline by 5% in the next six to 12 months. Cedric Lai, a Vice President and Senior Analyst at Moody's, stated that "the Chinese government has taken steps to bolster the property sector, but we reckon the effect on sales will be short-term and vary among the different kinds of cities."
There is hesitancy about what the future holds in terms of income levels, thus keeping customer expenditure fairly subdued. August saw the Chinese Consumer Price Index (CPI) go up by 0.1% on a yearly basis, counterbalancing the decrease observed in the previous month. The core CPI, not including food and energy costs, has been at the same 0.8% annual rate across both months. This is a developing story, so please check in for further information.
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