China's August factory output growth near six-year low

China's factory output grew at the lowest pace in nearly six years in August while growth in retail sales and investment also cooled, adding to signs of fragility in the economy that may prod Beijing into fresh policy measures to prevent a sharper sl
China's factory output grew at the lowest pace in nearly six years in August while growth in retail sales and investment also cooled, adding to signs of fragility in the economy that may prod Beijing into fresh policy measures to prevent a sharper slowdown. -- PHOTO: REUTERS

BEIJING (REUTERS) - China's factory output grew at the lowest pace in nearly six years in August while growth in retail sales and investment also cooled, adding to signs of fragility in the economy that may prod Beijing into fresh policy measures to prevent a sharper slowdown.

Industrial output rose 6.9 per cent in August from a year earlier - the lowest reading since December 2008 when the economy was buffeted by the global financial crisis, compared with expectations for an 8.8 per cent expansion and slowing from 9.0 per cent in July.

Retail sales climbed 11.9 per cent, lagging forecasts of 12.1 per cent and slowing from 12.2 per cent in July, the National Bureau of Statistics said.

Fixed-asset investment, an important driver of economic activity, grew 16.5 per cent in the first eight months from the same period last year, lower than forecasts, it said. Economists polled by Reuters had forecast 16.9 per cent growth in fixed-asset investment, slowing from 17.0 per cent in Jan-July.

China's economy got off to a weak start this year as first-quarter growth cooled to an 18-month low of 7.4 per cent. A raft of stimulus measures pushed that up slightly to 7.5 percent in the second quarter, but recent data have suggested the economy is again losing momentum and policymakers may have to do more to offset the growing drag from the cooling housing market.

Property investment data released on Saturday showed further declines in sales and new construction along with a drop in mortgages, while growth in housing-related goods such as home appliances, furniture and building materials such as steel and cement all slowed.

Data showed on Friday that credit levels in China appeared to improve in August after an alarming drop in July, but remained below average. That followed trade data that showed China's exports were buoyant but import growth unexpectedly fell for the second consecutive month in August, posting its worst performance in over a year.

Most analysts expect the government to unveil more steps in coming months in order to meet its 7.5 per cent economic growth target for the year, but the room for policy loosening is seen as limited after past stimulus programmes left many local governments saddled with piles of debt.

Premier Li Keqiang said on Monday that China cannot rely on loose credit to lift its economy, and reassured a business forum that Beijing would continue to roll out modest "targeted" measures as policymakers look to avert a sharper slowdown.