Investing.com-- The Chinese economy grew more than expected in the first quarter of 2024, as sustained government stimulus measures helped spur some improvement in business activity, while national holidays helped buoy consumer spending.
Q1 gross domestic product rose 5.3% year-on-year, data from the National Bureau of Statistics showed on Tuesday. The reading was above expectations of 4.8% and improved from the 5.2% print seen in the prior quarter.
Quarter-on-quarter, GDP 1.6%, compared to a 1% increase in the prior month.
Tuesday’s reading showed that China’s economy was well on track to achieve the government’s 5% annual GDP target- the same as 2023.
The reading came as purchasing managers index data released for the first three months of 2024 showed some improvement in business activity, especially in the manufacturing sector. Additionally, the week-long Lunar New Year holiday in February helped boost consumer spending, especially on discretionary items.
Beijing kept up its pace of liquidity injections and monetary stimulus measures through the quarter. The People’s Bank of China had even cut mortgage rates and reserve requirement rates earlier this year to increase liquidity.
But the outlook for China’s economy still remained dour, especially as a property market slump in the country showed little signs of slowing. A deflationary trend also largely remained in place through the first quarter, data had shown last week.
Industrial production, retail sales slow in March
But other data released on Tuesday showed that the Chinese economy may be slowing after a strong start to the year.
Industrial production grew 4.5% year-on-year in March, missing expectations for a rise of 5.4% and slowing from the 7% seen in the first two months of the year.
The reading signaled that Chinese factories may not be as healthy as initially expected, especially as they grapple with slowing local and overseas demand.
Retail sales grew 3.1% year-on-year in March, missing expectations of 5.1% and slowing sharply from the 5.5% seen in the prior two months. The data showed that Chinese consumer spending was weakening despite a boost in February, as weak overall economic conditions saw consumers tighten their purses.
Fixed asset investment, unemployment improve
Fixed asset investment rose 4.5% year-on-year in March, compared to expectations of 4% and rising from the 4.2% in the prior month. The reading indicated that capital spending by major Chinese businesses picked up pace in recent months, amid easy access to financing.
China’s unemployment rate fell to 5.2% in March after unexpectedly surging to a seven-month high of 5.3% in the prior month.