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QINGDAO TODAY
在线翻译:
szdaily -> Business -> 
Industrial output growth cools to 17-year low
    2019-06-17  08:53    Shenzhen Daily

THE country’s economy flashed more warning signs in May, with industrial output growth unexpectedly slowing to a more than 17-year low and investment cooling.

Hours after the weak data, the central bank announced 300 billion yuan (US$43 billion) in fresh support for smaller banks, though analysts expect more sweeping measures in coming months.

Industrial output grew 5 percent in May from a year earlier, data from the National Bureau of Statistics showed Friday, missing analysts’ expectations of 5.5 percent and well below April’s 5.4 percent.

The reading was the weakest since early 2002, and exports were a major drag, showing only marginal growth.

Fixed-asset investment also grew less than expected, reinforcing expectations that policymakers need to roll out more growth measures soon.

“The weakness in May’s and April’s activity data suggests that economic growth is likely to slow this quarter and increases the likelihood of additional monetary easing in the coming months,” Capital Economics said in a note.

Vice Premier Liu He stoked expectations of more action Thursday, urging regulators to do more to boost the economy and saying China has plenty of tools it can use.

Analysts at Goldman Sachs said in a note they expect authorities to further cut banks’ reserve requirement ratios (RRRs) to free up more funds to lend and lower interbank interest rates.

ANZ expects the Peoples’ Bank of China (PBOC) to cut RRR by another 100 basis points (bps) this year, and lower the seven-day reverse repo rate by 5 bps in the third quarter of the year.

The PBOC has already slashed RRR six times since early 2018 in a bid to turnaround soft credit growth. It has also injected large amounts of liquidity into the financial system and guided short-term interest rates lower.

However, analysts appear divided over whether the central bank will cut benchmark interest rates.

Fixed-asset investment growth decelerated to 5.6 percent in the January-May period from the same period a year earlier. Analysts had expected it to remain unchanged from 6.1 percent in the first four months of the year.

Private sector fixed-asset investment, which accounts for about 60 percent of total investment, also lost momentum. It rose 5.3 percent, down from 5.5 percent.

Power generation last month grew just 0.2 percent.

The PBOC has repeatedly urged State banks to keep lending to cash-strapped smaller, private firms at lower rates, even if they are facing short-term financial difficulty, but average rates edged back up in the first quarter.

The central bank said late Friday that it will raise the re-discount quota by 200 billion yuan and the standing lending facility quota by 100 billion yuan for small and medium-sized banks.

Infrastructure investment grew 4 percent in the first five months year on year, moderating from 4.4 percent in the first four months.

Retail sales bucked the downbeat trend, rising 8.6 percent in May year on year and picking up from 7.2 percent in April, a 16-year low.(SD-Agencies)

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