Tuesday’s batch of data, which also showed a decline in property market investment, does little to allay concerns about the outlook for the world’s second-biggest economy as both its domestic and export engines of growth remain underpowered.
Economy
China’s factory output, consumption highlight frail post-COVID economic recovery
Retail sales jumped 18.4%, speeding up sharply from a 10.6% increase in March for their fastest increase since March 2021. Analysts had expected retail sales to grow 21.0%.
The year-on-year figures were heavily skewed by declines last April when the financial hub of Shanghai and other major cities were under stringent anti-virus lockdowns and curbs, which severely impacted growth in the Asian giant in 2022.
“China will continue to deliver strong year-on-year growth of activity data in the second quarter on the back of a low base, but at a slower quarter-to-quarter pace than the first quarter as the recovery is losing steam.”
Indeed, other data over the past week showing shrinking imports in April, deepening factory gate deflation and worse-than-expected bank loans signaled weak domestic demand, raising pressures on policymakers to shore up the economic recovery as global growth falters.
China’s central bank kept the interest rate unchanged on Monday as expected, but markets are betting on more monetary easing in the coming months.
HIGH YOUTH UNEMPLOYMENT
The offshore Chinese yuan weakened towards a two-month low while the Aussie dollar flipped from early small gains to a loss after the discouraging data.
On top of fragile domestic and global demand conditions, Chinese policymakers have to contend with headwinds from recent Western bank failures, high global borrowing costs and the Ukraine war. High domestic debt and a still-shaky property market also remain concerns.
The data also showed fixed asset investment expanded 4.7% in the first four months of 2023 from the same period a year earlier, versus expectations for a 5.5% rise. It grew 5.1% in the January-March period.
Investment in the property sector, a key pillar of the economy, tumbled 16.2% year-on-year last month after a 7.2% drop in March, according to Reuters’ calculations based on official data, as investors remain cautious due to still-fragile demand.
But the youth jobless rate hit a record high at 20.4%, up from 19.6% in March, which Zhiwei Zhang, chief economist at Pinpoint Asset Management, described as a “worrying sign.”
“Some researchers in the market have been calling for more policy measures such as consumption coupons to boost domestic demand, but the government seems reluctant to do so. The growth target for this year is set at a low level, which leaves room for the government to wait and see.” China has set a modest growth target of about 5% in 2023, after badly missing last year’s goal. ($1 = 6.9121 Chinese yuan renminbi) (Additional reporting by Albee Zhang, Kevin Yao and Liangping Gao Editing by Shri Navaratnam)
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OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
The Canadian Press. All rights reserved.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
The Canadian Press. All rights reserved.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
The Canadian Press. All rights reserved.
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