BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/25

​May figures reinforce the view that China’s economy remains on a lower growth trend. As it has for months, on-year industrial output growth hovered around 6 % y-o-y, while the volume of retail sales (a rough indicator of service sector performance) was up 10 %. Electricity production in recent months has held at the same levels as a year ago.

While the slowing of growth in industrial output and retail sales appears to have ended, demand factors indicate further slowing ahead. On-year growth in fixed asset investment (FAI) slowed again significantly last month, while foreign trade figures for the first five months of the year reveal sluggish export demand. Under the current situation, it is difficult to see how private consumption alone could make up for the slowdown of other demand factors and stop the overall growth rate from falling. 

The key purchasing manager indices (PMIs) show industrial labour demand remains steadily on a long-term downward trend. In contrast, labour demand in the service sector eroded rapidly in the first five months of this year. However, there is no other evidence of a wider weakening of labour market conditions.

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