By Ambar Warrick
Investing.com-- China's industrial production and retail sales grew more than expected in August, data showed on Friday, indicating that a recovery in certain facets of the economy remained steady despite headwinds from new COVID-related curbs.
Data from the National Bureau of Statistics showed that output from Chinese factories grew 4.2% in August, up from growth of 3.8% in the prior month. The reading also beat estimates for growth of 3.8%.
The jump in industrial production comes as factories in hubs such as Shanghai ramped up activity to make up for a shortfall seen earlier this year due to COVID-related lockdowns.
A separate report showed Chinese retail sales grew 5.4% in August- their fastest pace of growth in six months. They also beat expectations for growth of 3.5%.
The readings show that activity in China’s main economic hubs is recovering steadily after the lifting of most COVID-linked restrictions earlier this year. Retail sales also appear to be benefiting from pent-up demand, as well as an improving job market.
China’s unemployment rate fell slightly to 5.3% in August from 5.4% in the prior month.
The positive data also reflects the effects of stimulus measures introduced over the past two months to revive economic growth. China has promised increased spending in the third quarter to support the economy.
The readings come at a time when sentiment towards the Chinese economy is at multi-year lows, largely due to Beijing’s strict zero-COVID policy.
China introduced new COVID-linked curbs in several regions last month, and has so far refused to budge on a policy that ground economic growth to a halt this year.
Friday’s data follows PMI readings for last month that showed manufacturing activity contracted for a second consecutive month in August. China’s trade surplus also sank to a three-month low during the month, as overseas and local demand remained weak.
Even with the positive readings for August, the Chinese economy has a long road to recovery. Investors are wary of more COVID outbreaks, as well as risks to economic growth from a struggling property market.
Earlier on Friday, data showed Chinese house prices shrank 1.3% in August from the prior year.
The Chinese yuan showed a mildly positive reaction to Friday's data, trimming some early losses. But the currency slid below the psychologically important 7 to the dollar.