BEIJING - China’s economic recovery picked up pace in August, with retail sales and industrial production surpassing economists’ expectations.

However, growth was still weighed down by the country’s continued property slump last month and its zero-Covid-19 policy, which has resulted in flash lockdowns and discouraged the Chinese from travelling even within the country.

Latest data from the National Bureau of Statistics (NBS) on Friday showed that retail sales in August grew 5.4 per cent compared with the same period last year, beating economists’ expectations on the back of strong car sales and restaurant revenue.

Car sales, the biggest item in retail, grew 16 per cent in August from a year ago, while restaurant revenue expanded by 8.4 per cent during the same period. 

Analysts polled by Bloomberg had expected overall retail sales to increase by 3.3 per cent, while a Reuters forecast predicted a growth of 3.5 per cent. 

Similarly, China’s industrial output, which measures activity in the manufacturing, utilities and mining sectors, rose 4.2 per cent last month from a year ago - higher than the 3.8 per cent forecast by both Reuters and Bloomberg.

NBS spokesman Fu Linghui said that the government’s stimulus policies and better control over the country’s Covid-19 outbreaks had boosted growth last month, despite the extreme summer heat and a challenging international environment.

“In the next stage, stable recovery should still be (key)... while controlling the pandemic,” he said, adding that officials would continue to work on “expanding effective demand” and stabilising employment and prices.

The People’s Bank of China had been lowering interest rates since earlier this year to try to spur growth. 

Most recently, on Aug 22, the central bank cut its one-year loan prime rate to 3.65 per cent, down 0.05 percentage point, to encourage lending. 

The five-year loan prime rate, which usually measures mortgages, was lowered to 4.3 per cent from 4.45 per cent.

A separate set of official data, also released on Friday, showed that China’s property sector continued to shrink in August as home prices, sales and investment slumped. 

New home prices fell 1.3 per cent last month from a year ago, sharper than the 0.9 per cent decline in July.

Property investment dropped even further, at 7.4 per cent in the first eight months year on year, steeper than the 6.4 per cent decline between January and July.

Sales by floor area slumped 23 per cent between January and August from a year ago, similar to the 23.1 per cent decline recorded in the first seven months.

Meanwhile, fixed-asset investment, which the government has relied on heavily this year to aid growth, grew by 5.8 per cent in the first eight months compared with the same period last year - a slight increase from the 5.7 per cent rise recorded between January and July.

The urban surveyed unemployment rate was 5.3 per cent in August, edging down slightly from the 5.4 per cent in July.

But the jobless rate among youth aged between 16 and 24 remained high at 18.7 per cent last month, though down from the record 19.9 per cent in July.

Chief China economist Larry Hu at financial firm Macquarie Group in Hong Kong said that the government’s stimulus has “helped a lot, evidenced by the strong growth in car sales and infrastructure spending”.

He added that although the latest data is better than expected, it is unlikely to change the prevailing pessimism towards China, given various risks including zero-Covid-19 and the property rout. 

China has in recent months toned down its ambition to hit the “around 5.5 per cent” growth target set during the annual parliamentary meetings in March this year, with economists expecting growth to come in at around 4 per cent for the whole year.