(Bloomberg) -- China’s economic slowdown deepened in the first two months of the year pushing unemployment sharply higher, raising the stakes for the government’s current stimulus strategy.
- Industrial output rose 5.3 percent from a year earlier, the worst start to a year since 2009. Retail sales expanded 8.2 percent, the slowest pace since at least 2012. On the upside, fixed-asset investment picked up and property investment jumped.
Key Insights
- The unemployment rate rose to 5.3 percent at the end of February from 4.9 percent in December, the highest level in two years.
- Property investment jumped to 11.6 percent growth, the highest since November 2014.
- “The industrial production reading is probably close to the bottom,” Helen Qiao, chief Greater China economist at Bank of America Corp (NYSE:BAC). in Hong Kong told Bloomberg Television. “We think that growth will stabilize and improve in the second quarter,” she said, adding that the improvement in property markets will buoy consumer demand.
- “Today’s data means the economy will take a longer time to bottom out as industrial production and consumption are still under pressure despite the rebound in investment” and the worsening jobless rate indicates more easing policies to come as policy makers always put employment at the first place, said Liu Peiqian, Asia strategist at Natwest Markets PLC in Singapore.
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- Policy makers have signaled during the ongoing annual national legislature meeting that a debt-fueled investment boom won’t be deployed to cushion the slowdown, and tax reductions will be the main focus of stimulus.
- There was no January data as the National Bureau of Statistics combines readings for the first two months of each year to smooth out volatility from the Lunar New Year holiday, when factories and businesses across the country shut down.
(Updates throughout.)
