China activity data for February receives mixed response from economists

Chinese economic activity slowed down a tad more quickly than expected at the start of 2019, a batch of economic reports revealed, with economists emphasising the negatives in the latest figures.

According to the National Bureau of Statistics, the rate of growth in industrial value-added fell from December's pace of 5.7% year-on-year to 5.3% in the first two months of the year (consensus: 5.6%).

Statisticians in China combine data for January and February in order to take into account distortions linked to the Chinese New Year, which can fall in one month or another, depending on the year.

Retail sales growth meanwhile was steady at a year-on-year pace of 8.2%, as expected by consensus.

Fixed asset investment did perk-up, also as anticipated, with the year-on-year rate of growth rising from 5.9% for December to 6.1%.

Commenting on the data, Julian Evans-Pritchard at Capital Economics said: "At best, the latest data will ease concerns over a sharp slowdown at the start of the year. But the near-term outlook still looks downbeat."

To back-up his line of reasoning, Evans-Pritchard pointed to the recent pullback in housing starts, saying it signaled a slowdown in property construction in the months ahead.

A decline in infrastructure spend meanwhile suggested fiscal loosening was still "struggling to gain momentum", he said.

For her part, and when it came to the latest retail sales figures, Freya Beamish at Pantheon Macroeconomics said: "tax cuts appear, at least, to have helped stabilise the situation, but households now face further labour market deterioration.

"And food inflation could soon start to erode purchasing power, creating a headwind in coming months."

On a brighter note, and regarding the FAI figures, she said that: "The underlying data are still very distorted and don’t support the pick-up in the headline, but a strengthening makes sense in the wider economic context."