China May output, retail sales steady but investment cools

Wed Jun 14, 2017 12:37am EDT
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BEIJING (Reuters) - China's factory output and retail sales grew at a steady pace in May but investment slowed, reinforcing views that the world's second-largest economy will soon start to lose some momentum as lending costs rise and the property market cools.

Global concerns about China have resurfaced since Moody's Investors Service downgraded its credit ratings last month, saying it expects the country's financial strength will erode in coming years as growth slows and debt continues to rise.

But most analysts predict only a gradual loss of momentum in coming months, especially as the government is keen to maintain economic and financial market stability ahead of a major political leadership reshuffle in autumn.

May data released on Wednesday appeared to reinforce that consensus view, with still solid factory output and retail sales, and only a slight slowdown in fixed asset investment.

However, property investment and construction showed a much sharper deceleration after a slew of government cooling measures in recent months.

Factory output rose 6.5 percent in May from a year earlier, statistics bureau data showed on Wednesday.

Analysts polled by Reuters had predicted factory output would grow 6.3 percent in May, easing slightly from 6.5 percent in April.

But, for now, manufacturing activity still appeared to be well supported by a year-long construction boom fueled by a government infrastructure spree and a heated property market. Sales of excavating machines doubled in May from a year earlier, according to an industry website.

Fixed-asset investment growth slowed to 8.6 percent in the first five months of the year. It had been expected to slip to 8.8 percent from 8.9 percent in Jan-April.   Continued...

FILE PHOTO: Chinese national flags are flying near a steel factory in Wu'an, Hebei province, China, February 23, 2017.  REUTERS/Thomas Peter/File Photo