China’s industrial production growth fell short of expectations in April, with a year-on-year increase of 5.6% yoy, significantly under expectation of 10.1% growth. Despite missing the mark, the growth rate outpaced March’s 3.9% yoy rise and marked the fastest expansion since September 2022.

Retail sales also grew less than expected, posting 18.4% yoy rise, which fell short of anticipated 20.1% yoy growth. The figure was largely inflated due to a low comparison base, as retail sales plummeted by -11.1% yoy in April of the previous year due to severe lockdowns. On a monthly basis, retail sales contracted by -7.8% mom from March.

Fixed asset investment growth also came in below expectations 4.7% ytd yoy growth, underperforming expectation of 5.2%.

Urban jobless rate ticked down from 5.3% to 5.2%. However, unemployment among 16-24 age group spiked to a record high of 20.4%, up from 19.6% in the previous month. This exceeded the previous record of 19.9% set in July 2022.

The National Bureau of Statistics (NBS) stated, “In general, in April, the national economy continued to recover, and positive factors accumulated and increased. But we must also see that the international environment is still complex and severe, domestic demand is still insufficient, and the endogenous driving force for economic recovery is not yet strong.”

China Caixin PMI Services rose to 52.1 in August, up from 51.6 and beat expectation of 51.8. PMI Composite rose to 51.6, up from 50.9. Caixin noted that manufacturers and services provides both saw improved rates by business activity growth. The composite new orders expanded at the quickest rate for four months. Also, total employment increased for the first time since April.

Commenting on the China General Services PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:

“The Caixin China General Services Business Activity Index rose to 52.1 in August from 51.6 in the previous month, indicating a slight improvement in the services sector.

“The gauge for new business stayed in expansionary territory and edged up, while the one for new export business dropped — although it remained in positive territory — suggesting that domestic demand was stronger than foreign demand. The employment measure jumped notably, pointing to the sector’s strengthening capability to absorb workers.

“Both gauges for input costs and prices charged by service providers moved further into expansionary territory, implying an enhanced upward trend in prices. The measure for business expectations also stayed in positive territory and moved up, reflecting companies’ increasing confidence in their prospects.

“The Caixin China Composite Output Index rose to 51.6 in August from 50.9 in the month before, pointing to a slight recovery in China’s economy.

“While the gauge for overall new orders inched up, the one for new export business dipped into contractionary territory. The decline in overseas demand reflected the adverse shock of the Sino-U.S. trade conflict. The employment gauge returned to expansionary territory, hitting the highest since January 2015, suggesting an improvement in labor market conditions.

“Both gauges for input costs and output charges dipped, reflecting a downward trend in overall prices. The measure for future output edged down, despite staying in positive territory, suggesting that business confidence remained subdued.

“China’s economy showed clear signs of a recovery in August, especially in the employment sector. Countercyclical policies took effect gradually. However, the Sino-U.S. trade conflict remained a drag, and business confidence remained depressed. Still, there’s no need to be too pessimistic about China’s economy, with the launch of a series of policies to promote high-quality growth.”

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At a financial forum in Shanghai, Chinese Vice Premier Liu He said there are plenty of policy tools to use to deal with the challenges the economy is facing. He also sounded confidence and said major macroeconomic indicators all remain within reasonable ranges. Meanwhile, China will roll out more strong measures on reforms in the near future.

In the same forum, Pan Gongsheng, head of the State Administration of Foreign Exchange, said the country’s FX market is largely stable with FX reserves steadily rising. And, China is capable and confident of keeping its currency basically stable. Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC) reiterated there are plans to further open up its banking securities and insurance sectors.

Separately, the official China Daily said that more money and credit supply adjustment are under way to counter the downside risks of trade war. Measures could include cuts in interest rates or reserve ratio requirements. The newspaper noted the near for stronger measures to maintain liquidity in the financial market and support infrastructure investment