Chinese industrial production surges in Jan-Feb, but unemployment rises

Investing.com-- Chinese industrial production grew more than expected in the first two months of 2024, as manufacturing output continued to benefit from supportive policies and monetary stimulus from the government.

But an unexpected increase in unemployment and weaker-than-expected retail sales data showed large swathes of the Chinese economy still remained under pressure. 

Industrial production rose 7% year-on-year in the January-February period, data from the National Bureau of Statistics showed on Monday. The reading was higher than expectations of 5.3% and accelerated from the 6.8% rise seen in December. 

Chinese manufacturers continued to ramp up production amid increased government subsidies and stimulus injections, even as other data showed that domestic and external demand for Chinese goods remained weak. 

China’s unemployment rate unexpectedly rose to 5.3% from 5.1% in the Jan-Feb period, hitting its highest level since July 2023 as broader economic activity remained weak. China is grappling with a prolonged crisis in its property market, as well as weak consumer spending as a post-COVID economic rebound largely failed to materialize through 2023. 

Retail sales grew 5.5% year-on-year in the Jan-Feb period, less than expectations for a rise of 5.6% and slowing from the 7.4% rise seen in December. 

The weak print came despite increased consumer spending during the Lunar New Year holiday, which now appeared to have provided only a limited boost to overall retail turnover.

The reading showed that Chinese consumer spending, which became a major economic driver over the past decade, remained weak as other aspects of the economy slowed. 

The reading also heralds little improvement in China’s deflationary trend.

Still, other data showed that Chinese businesses continued to engage in strong capital spending. Fixed asset investment grew 4.2% in the Jan-Feb period, more than expectations for a rise of 3%.  

But the country’s outlook for 2024 remains dour, especially as Beijing set an underwhelming 5% gross domestic product target for the year- the same as 2023. The government also gave scant cues on more stimulus measures, which investors have been clamoring for amid worsening economic conditions.