By Gina Lee
Investing.com – China's factory and retail sectors hit a bump on the road to economic recovery in August thanks to COVID-19 outbreaks and supply disruptions.
Data from the National Bureau of Statistics (NBS) released earlier in the day said industrial production grew 5.3% year-on-year, its weakest pace since July 2020. The growth was also lower than both the 5.8% in forecasts prepared by Investing.com and July’s 6.4% growth.
Chinese industrial production year to date rose 13.1% year-on-year, down from July’s 14.4% growth.
Meanwhile, retail sales grew 2.5% year-on-year, a sharp drop from both the 7% growth in Investing.com forecasts and July’s 8.5% growth.
"Recent economic data reflected the overall demand is still weak in the economy, vulnerable to sporadic COVID-19 outbreaks, but some sectors have been overheated, judging from the persistently high commodity prices," Hwabao Trust economist Nie Wen told Reuters.
"Policymakers will face a dilemma in terms of how to respond to a situation like this."
Supply chain bottlenecks, semiconductor shortages, curbs on high-polluting industries and the crackdown on the property sector also contributed to declining growth.
Although the world's second-largest economy has largely recovered from 2020’s COVID-19-induced slump, fresh outbreaks have put a dent in the pace and raised expectations of further government support.
"We had been expecting services activity to rebound strongly in September as the COVID-19 situation was back under control," Capital Economics Senior China Economist Julian Evans-Pritchard told Reuters. However, the latest outbreak in Fujian province could derail the recovery further, he added.
NBS data also said fixed-asset investment grew 8.9% year-on-year, down from the 9% growth in Investing.com forecasts and July’s 10.3% growth.
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