China’s August retail sales miss forecast as investment slump deepens

China’s investment slump deepened and retail sales growth slowed further in August, while industrial output topped estimates with authorities warning of acute supply-demand imbalance at home.

Retail sales grew 0.4% in August from a year earlier, data from National Bureau of Statistics showed on Tuesday, slowing from 0.6% in the prior month and missing economists’ forecast for a 0.8% growth in a Reuters poll.

Industrial output expanded 5.2% last month, accelerating from 4.5% growth in July and outperforming economists expectations for a 4.8% rise.

For the first eight months of the year, urban fixed-asset investment, which covers property and infrastructure investment, shrank 7.2% from a year earlier, steepening from 6.7% decline in the January-to-July period, matching analysts’ expectations.

The urban survey-based unemployment rate in August ticked up to 5.3% from 5.2% in July, and unchanged from the same period last year.

NBS spokesperson Fu Linghui attributed the uptick in unemployment to the graduation season, while highlighting stable employment in manufacturing, good prospects for tech jobs and growth in the hospitality and catering sectors.

“We should be aware that the adverse impact of (the) external environment has intensified,” the statistics bureau said in an English-language release. It noted “acute” imbalance domestically between “strong supply and weak demand,” adding that some businesses still faced operational difficulties.

In the statement, the NBS called for stepping up macro-policy adjustments and boosting domestic demand, while advancing industrial upgrades for “innovation-led” development.

While growth in the world’s second-largest economy slowed to 4.3% in the second quarter, the weakest pace in more than three years, policymakers have so far resisted more aggressive stimulus, relying instead on incremental measures to shore up growth.

“The market is waiting for the fiscal policy to become more supportive in Q3,” said Zhiwei Zhang, president at Pinpoint Asset Management, after tepid growth in the second quarter. He expects the economy to continue facing downside risks as fiscal support takes time to take effect.

Beijing has stepped up government bond issuance and expanded loan-interest subsidies for small private businesses and consumers in recent weeks, while the central bank has pledged more policy support without signaling an explicit rate cut.

Efforts to fire up appetite for new debt have, however, fallen short. China’s credit expansion in August missed forecasts by a wide margin, with…