China's Upbeat Industrial Output, Retail Sales Tempered by Frail Property

• China's factory output and retail sales beat expectations in January-February, marking a solid start for 2024 and offering some relief to policymakers even as weakness in the property sector remains a drag on the economy and confidence.
• Monday's data join recent better-than-expected exports and consumer inflation indicators, providing an early boost to Beijing's hopes of reaching what analysts have described as an ambitious 5.0% GDP growth target for this year.
• Industrial output rose 7.0% in the first two months of the year, data released by the National Bureau of Statistics (NBS) showed on Monday. This was above expectations for a 5.0% increase in a Reuters poll of analysts and faster than the 6.8% growth seen in December. It also marked the quickest growth in almost two years. Retail sales, a consumption gauge, rose 5.5%, slowing from a 7.4% increase in December but beating an expected 5.2% gain.
• The eight-day Lunar New Year holiday in February saw a solid return of travel, which supported revenue from the tourism and hospitality sectors. That also led to a 3% growth in oil refineries to meet the strong demand for transport fuels.
• "Consumers were buoyed temporarily by festivities-related spending at this start of the year. Without decisive consumption-related stimulus, we think it would be difficult to sustain a robust consumer spending pace this year," Oxford's Loo said.
• Loo's cautious comments reflect a broader consensus among China watchers that Beijing has its work cut out in achieving its 2024 economic growth target of "around 5.0%". While the goal was similar to 2023, analysts note last year had a lower base effect due to COVID-19 curbs in 2022.

(Source: Reuters)