An employee works on a production line at a car wheel rim factory in Qingzhou, in eastern China'a Shandong province, on June 17.China’s May industrial output lagged expectations and a slowdown in the property sector showed no signs of easing despite policy support, adding pressure on Beijing to shore up growth.
“May activity data and our high-frequency trackers for the first half of June suggest significant cross-sector divergences remain in the economy – strong exports and manufacturing activity, relatively stable consumption, and still-depressed property activity,” Goldman Sachs analysts said in a note. Private sector investment grew 0.1 per cent in January-May, down from 0.3 per cent in the first four months, pointing to still weak confidence among private businesses. By comparison, investment in the state sector jumped 7.1 per cent in the first five months.
“We still see the likelihood of a cut to the Loan Prime Rate this month, particularly on the 5-year tenor, as this will help banks to retain households’ mortgage loans,” said Zhou Hao, chief economist at Guotai Junan International. New home prices slipped 0.7 per cent in May from April, marking the 11th straight month-on-month decline and steepest drop since October 2014, according to Reuters calculations based on NBS data.