China’s economy shows further weakness as retail sales struggle

Chinese retail sales expanded 7.2 percent last month, well off the 8.4 percent tipped by economists and a big drop from March. (AFP)
Updated 15 May 2019
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China’s economy shows further weakness as retail sales struggle

  • Authorities have been attempting to transition the world’s number two economy from being reliant on state investment and exports to a more stable one
  • The readings fanned speculation that authorities will unveil another round of pump-priming measures

BEIJING: China’s economy showed further signs of weakness in April as the slowest growth in retail sales for 16 years highlighted the task leaders have in ramping up domestic demand at the same time as fighting a painful trade war with the US.
Authorities have for years been attempting to transition the world’s number two economy from being reliant on state investment and exports to a more stable one driven by China’s huge army of consumers, with the tariffs stand-off reinforcing the need for such a change.
But the latest figures on Wednesday show retail sales expanded 7.2 percent last month, well off the 8.4 percent tipped by economists in a Bloomberg News survey and a big drop from March.
The figures from the National Bureau of Statistics (NBS) represent the worse pace since 2003, at the height of the SARS crisis.
The bureau also said growth in industrial production slowed sharply to 5.4 percent from, while fixed asset investment in the four months to April rose 6.1 percent. Both missed Bloomberg estimates.
The readings fanned speculation that authorities will unveil another round of pump-priming measures — having wound back on such stimulus in recent weeks following signs of a bounce in the economy — with Shanghai’s composite index jumping more than one percent Wednesday.
Beijing has rolled out huge tax-cuts and other measures this year to ramp up the economy and offset the impact of a trade war that has seen the US impose tariffs on hundreds of billions of dollars worth of Chinese goods, causing worries for exporters.
However, while leaders will want to prevent the economy from taking a bad hit, Julian Evans-Pritchard of Capital Economics was skeptical about how much they will do.
“With the scale of stimulus likely to remain smaller than in previous downturns, we don’t anticipate a strong recovery,” he said.
On a brighter note, Betty Wang, an economist at ANZ bank, said in a research note that property investment had picked up over the first four months of the year thanks to “a big jump in developers’ funding conditions,” with bank loans, down payments and mortgages all growing at a quicker pace.


UK core pay growth strongest in nearly 11 years, but jobs growth slows

Data showed the unemployment rate remained at 3.8 percent as expected. (Shutterstock)
Updated 16 July 2019
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UK core pay growth strongest in nearly 11 years, but jobs growth slows

  • Core earnings have increased by 3.6 percent annually, beating the median forecast of 3.5 percent
  • The unemployment rate fell by 51,000 to just under 1.3 million

LONDON: British wages, excluding bonuses, rose at their fastest pace in more than a decade in the three months to May, official data showed, but there were some signs that the labor market might be weakening. Core earnings rose by an annual 3.6 percent, beating the median forecast of 3.5 percent in a Reuters poll of economists. Including bonuses, pay growth also picked up to 3.4 percent from 3.2 percent, stronger than the 3.1 percent forecast in the poll. Britain’s labor market has been a silver lining for the economy since the Brexit vote in June 2016, something many economists attribute to employers preferring to hire workers that they can later lay off over making longer-term commitments to investment. The pick-up in pay has been noted by the Bank of England which says it might need to raise interest rates in response, assuming Britain can avoid a no-deal Brexit. Tuesday’s data showed the unemployment rate remained at 3.8 percent as expected, its joint-lowest since the three months to January 1975. The number of people out of work fell by 51,000 to just under 1.3 million. But the growth in employment slowed to 28,000, the weakest increase since the three months to August last year and vacancies fell to their lowest level in more than a year. Some recent surveys of companies have suggested employers are turning more cautious about hiring as Britain approaches its new Brexit deadline of Oct. 31. Both the contenders to be prime minister say they would leave the EU without a transition deal if necessary. A survey published last week showed that companies were more worried about Brexit than at any time since the decision to leave the European Union and they planned to reduce investment and hiring. “The labor market continues to be strong,” ONS statistician Matt Hughes said. “Regular pay is growing at its fastest rate for nearly 11 years in cash terms and its quickest for over three years after taking account of inflation.” The BoE said in May it expected wage growth of 3 percent at the end of this year.