Renewable Energy

China's May industrial output growth cools to 17-yr low as trade war bites

Credit: REUTERS/JASON LEE

China's industrial output growth unexpectedly slowed to a more than 17-year low in May, while investment also cooled, in the latest sign of weakening demand in the world's second-largest economy as the United States ramps up trade pressure.

By Stella Qiu and Kevin Yao

BEIJING, June 14 (Reuters) - China's industrial output growth unexpectedly slowed to a more than 17-year low in May, while investment also cooled, in the latest sign of weakening demand in the world's second-largest economy as the United States ramps up trade pressure.

Industrial output grew 5.0 percent in May from a year earlier, data from the National Bureau of Statistics showed on Friday, missing analysts' expectations of 5.5% and well below April's 5.4%. It was the weakest reading since early 2002.

Fixed-asset investment also grew less than expected, reinforcing expectations that Beijing will need to roll out more growth-boosting measures soon.

Vice Premier Liu He on Thursday stoked expectations of more stimulus as the U.S.-China trade dispute intensifies, urging regulators to do more to boost the economy and saying Beijing has plenty of policy tools it can use.

Despite a slew of support measures since last year, China's cooling economy is still struggling to get back on firmer footing, and investors fear a longer and costlier trade war between the world's two largest economies could trigger a global recession.

Friday's data showed domestic demand remains sluggish, as suggested by weaker-than-expected import and bank lending data over the last week and gloomy May factory surveys.

SLOWING INVESTMENT

Fixed-asset investment rose 5.6% in January-May from the same period a year earlier, decelerating from 6.1% tipped in the Reuters poll and 6.1% in January-April.

Private sector fixed-asset investment, which accounts for about 60 percent of total investment in China, also showed signs of losing momentum. It rose 5.3%, compared with a 5.5% rise in the first four months of the year.

Infrastructure investment grew 4.0%, slowing from 4.4%.

Analysts have been closely watching for signs of a rebound in infrastructure investment as Beijing ramps up spending on road, rail and port projects, which would boost construction-related industries from steel mills to cement makers.

Real estate investment, a key economic growth driver, also showed signs of fatigue. It rose 11.2% in the first five months, slowing from 11.9%.

Retail sales bucked the downbeat trend, rising 8.6% in May from a year earlier and picking up from a 7.2% rise in April, which was a 16-year low.

Analysts surveyed by Reuters had expected a rebound to 8.1%, but some said it was likely due to higher inflation rather than any turnaround in weak consumer confidence.

Earlier this week, China's auto association reported the worst-ever monthly drop in sales in the world's biggest vehicle market in May as the economy slowed and provinces implemented tougher emission standards.

GRAPHIC - China's economic trends http://tmsnrt.rs/2iO9Q6a

(Reporting by Stella Qiu and Kevin Yao; Editing by Kim Coghill)

((Huizhong.Wu@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Renewable Energy Videos

    Reuters

    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

    Learn More