Mixed Activity Outcomes, Weaker Property Still Evident

China Feb activity data was better than expected, with upside surprises recorded in terms of industrial production and fixed asset investment growth. Retail sales and property investment were slightly weaker than forecast, while the unemployment rate ticked higher.

• IP growth was 7.0% in ytd y/y terms, against a 5.2% forecast. Strength was notable in manufacturing and utilities (with mining weaker). Still parts of metals were strong, as were tech /computers. Auto production eased to 9.8% from 20.0%.
• It was a similar story across the fixed asset investment space. State-owned enterprises continued to outperform, up 7.3% ytd y/y, but private enterprises recorded much more modest growth of 0.4%, albeit out of negative territory where we spent much of 2023. Infrastructure spending rose 6.3%, so still a source of support for aggregate growth.
• Property indicators remain weak. Aggregate investment was down -9.0% ytd y/y, against a forecast of -8.0%. Under construction (-11% ytd y/y) and new construction (-29.7% ytd y/y) weakened further against Dec outcomes. Funds for property development were also down to -21.1% ytd y/y (versus -13.6% in Dec).
• Retail sales was close to expectations at 5.5% ytd y/y, versus 5.6% forecast. The detail was mixed, with a clear slowing in restaurant and catering to 12.5% ytd y/y, but last year's bounce reflected emerging from lockdown. Spending on household electronics and automobiles rose in ytd y/y terms for Feb.
• The unemployment rate edged up to 5.3% from 5.1% in Dec last year.

Fig 1: China IP & Property Investment YTD Y/Y