Surprise rebound in retail sales and industrial production

Retail sales and industrial production in China saw an unexpected acceleration in August, despite strict health measures and power shortages that weighed on activity in August.

Main indicator of household expenditure, retail sales increased by 5.4% year on year in August, compared to 2.7% in July, announced the State Bureau of Statistics (BES). Analysts anticipated a more moderate acceleration (3.2%).

On his side, industrial production was also up 4.2% year on year last month. This is a rate there also higher than that of July and the expectations of analysts, that is to say 3.8%.

In August, “The Chinese economy has held up a little better than expected”, analyst Julian Evans-Pritchard of the firm Capital Economics told Agence France Presse. For economist Larry Hu of Macquarie investment bank, “the government’s economic support measures have helped a lot”.

However, the ” worse “ should take place in September due to the housing crisis, a slowdown in exports on which Chinese growth depends, as well as anti-Covid restrictions, warned Julian Evans-Pritchard.

China is one of the last countries to apply a so-called “zero Covid” policy in the face of the Covid-19 epidemic. This health strategy includes massive screenings, mandatory quarantines in the event of a positive PCR test and targeted confinements.

Despite everything, China has been confronted in recent weeks with an epidemic rebound, limited in terms of cases but which affects many provinces. In addition to Shanghai and Beijing, Chengdu, one of the largest cities in China, thus confined the majority of its 21 million inhabitants at the beginning of the month. This confinement will have consequences on the economic indicators for September, economist Rajiv Biswas, from the firm S&P Global Market Intelligence, told AFP.

In real estate, a pillar of growth, prices fell in more cities (56 out of a panel of 70) in August, according to the BNS. However, China has faced the hottest summer since weather records began in 1961. The drying up of the rivers, which supply the hydraulic dams, forced the authorities to locally ration electricity, which weighed on activity.

Investment in fixed assets nevertheless increased by 5.8% over the first eight months of the year. Regarding the unemployment rate, it fell slightly in August (5.3%), after 5.4% a month earlier. Particularly watched by the authorities and calculated for urban dwellers only, the unemployment rate had reached an almost historic level in April (6.1%), before falling.

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