China’s industrial output growth weakened last month to its slowest pace in more than three years, official figures showed yesterday, confirming a deepening slowdown in the world’s second-biggest economy.
Production increased just 8.9 percent year-on-year last month, the Chinese National Bureau of Statistics announced — the lowest result since a similar rise of 8.9 percent in the depths of the global economic crisis in May 2009.
China’s economy has seen a marked easing over the past year, expanding 7.6 percent in the second quarter, the worst performance in three years and the sixth straight quarter of easing.
The latest gloomy readings come as export-reliant nations feel the pinch from collapsing demand caused by the long-running debt crisis gripping Europe and the stuttering recovery in the US.
China’s output figure for last month “says clearly that growth was weakened further,” Lu Ting (陸挺), China economist at Bank of America Merrill Lynch, said in a report.
Also yesterday, the statistics bureau announced that China’s inflation rate accelerated slightly last month amid higher costs for food, potentially limiting the government’s ability to enact fresh monetary stimulus measures.
Consumer prices rose 2 percent year-on-year as food prices increased 3.4 percent. Inflation stood at 1.8 percent in July.
Chinese authorities have taken steps this year to stimulate growth by cutting interest rates twice in quick succession and slashing the amount of funds banks must keep in reserve as ways to increase lending.
Analysts have been expecting further monetary loosening to fire growth, though the slight rise in inflation makes another decrease in interest rates less of an option because of the inflationary risks they pose.
“The likelihood of a cut is now clearly smaller than last month,” IHS Global Insight economists Ren Xianfang (任現芳) and Alistair Thornton said in a report, emphasizing that higher consumer prices make it harder to “absorb the inflationary pressure” of monetary stimulus.
Their report said the government was more likely to favor other tools such as fiscal stimuli, to help boost the economy.