GROWTH in China’s investment, retail sales and factory output all missed forecasts in January and February and fell to multi-year lows, leaving investors with little doubt that the economy is still losing steam and in need of further support measures.

    The figures came a day after data showed deflationary pressures intensified in the factory sector in February, reinforcing expectations of more interest rate cuts and other policy loosening to avert a sharper slowdown in the country.

    “Activity data surprised the market on the downside by a large margin, suggesting that China’s first quarter GDP growth could likely fall to below 7 percent,” ANZ economist Li-Gang Liu said in a research note.

    “In our view, the extremely weak data at the beginning of the year suggest that China needs to engage in more aggressive policy easing, and we see that a reserve requirement ratio (RRR) cut will be imminent,” he said, adding that stimulus measures rolled out since last year seem to have had limited effect.

    Industrial output grew 6.8 percent in the first two months of the year compared with the same period a year ago, the National Bureau of Statistics said yesterday, the weakest expansion since the global financial crisis in late 2008.

    Analysts polled by Reuters had forecast a 7.8 percent rise, down slightly from December.

    Retail sales rose 10.7 percent, the lowest pace in a decade and missing expectations for an 11.7 percent rise.

    Fixed-asset investment, a crucial driver of the Chinese economy, rose 13.9 percent, the weakest expansion since 2001 and compared with estimates for a 15 percent gain.

    China combines its January and February data releases for investment, retail sales and factory output to minimize distortions from the Lunar New Year holiday, which fell in late January last year but in mid-February this year.

    Sluggish factory activity reinforces expectations that China’s economic growth will slow to a quarter-century low of around 7 percent this year from 7.4 percent in 2014, even with expected additional stimulus measures.

    Power generation rose 1.9 percent in January and February from a year earlier, well below 3.2 percent seen in all of 2014.

    Yin Weimin, minister of human resources and social security, cautioned this week that China’s labor market also faces greater pressure. Employment fell more in January and February than in the same period last year, he said, while adding that he was confident China can still create more than 10 million jobs this year.

    The Chinese economy has had a rough ride in the past 15 months as a property downturn compounded slackening growth in foreign and domestic demand and persistent industrial overcapacity.(SD-Agencies)