On March 15, 2024, high-rise residential and commercial buildings were under construction near Dongyu Road, Qiantan, Pudong New District, Shanghai, China.
Noor Photos | Noor Photos | Getty Images
BEIJING – China’s economic data for the first two months of the year released on Monday exceeded analysts’ expectations.
Retail sales grew 5.5%, better than the 5.2% growth forecast in a Reuters survey, while industrial production grew 7%, higher than the 5% growth expected.
Fixed asset investment grew 4.2%, exceeding expectations of 3.2%.
The urban unemployment rate was 5.3% in February.
In the first two months of this year, online retail sales of physical goods increased by 14.4% year-on-year.
Real estate investment fell 9% annually in the first two months of this year. Infrastructure investment increased by 6.3%, and manufacturing investment increased by 9.4%.
In China, economic data for January and February are typically combined to account for changes in the Lunar New Year, which can occur in any month depending on the calendar year. It’s the country’s largest national holiday, with factories and businesses closed for at least a week.
This year, domestic tourist arrivals and holiday revenue have increased compared with last year and before the epidemic in 2019. But Lu Ting, chief China economist at Nomura Securities, pointed out that “per capita tourism spending is still 9.5% lower than last year’s pre-pandemic levels in 2019.” “
Retail sales have not rebounded from the pandemic as strongly as many expected as consumers become increasingly uncertain about future incomes.
Goldman Sachs analysts said in a note on Friday that new loans fell less than expected in February and fell quarterly “even on a seasonally adjusted basis.”
“Persistent weakness in property transactions and low consumer confidence are likely to continue to weigh on household borrowing,” analysts said. “More monetary policy easing is needed.”
Pan Gongsheng, governor of the People’s Bank of China, said earlier this month that there was still room to cut the reserve requirement ratio or the amount of cash banks have on hand.
Goldman Sachs expects the ratio to fall by 25 basis points in the second and fourth quarters of this year.
Real estate, which accounts for a large portion of household assets, has fallen sharply in the past few years after Beijing’s policies cracked down on developers’ reliance on debt to grow.
Goldman Sachs analysis using a weighted average of official data showed average house prices in China’s 70 major cities fell 4.5% in February from January on a seasonally adjusted annualized basis.
Goldman Sachs said this was larger than the 3.5% quarterly drop in home prices in January.
“Our high-frequency tracking shows that new home transaction volume in 30 cities fell 53.2% year-on-year in early March after adjusting for the lunar calendar,” analysts said in a report.
At the annual National People’s Congress meeting that ended last week, Chinese authorities did not reveal significant new support for the massive real estate industry.
Instead, Beijing emphasizes the country’s focus on developing manufacturing and technological capabilities.
Data earlier this month showed that China’s exports grew 7.1% in dollar terms in January and February, beating expectations for a 1.9% increase.
Imports grew by 3.5% during the same period, also exceeding Reuters’ forecast of 1.5% growth.
