China’s factory output has topped forecasts in April helped by improving external demand, although retail sales unexpectedly slowed and the property sector remained a drag on the economy, piling pressure on Beijing to do more to support growth.

A mixed set of data on Friday followed other indicators for April that showed a patchy recovery in the world’s second-largest economy, with trade and consumer prices perking up but credit growth mired by weak consumer confidence.

Industrial output grew 6.7 per cent year-on-year in April, National Bureau of Statistics (NBS) data showed, accelerating from the 4.5 per cent pace seen in March and above the 5.5 per cent increase tipped in a Reuters poll of analysts.

However, retail sales rose just 2.3 per cent, the slowest increase since December 2022, off the 3.1 per cent increase in March and far short of the forecast 3.8 per cent rise.

“The data pattern remains one of strong external demand and weak domestic demand. The weakness in domestic demand is clearly a result of the deterioration in real estate,” said ANZ senior China strategist Xing Zhaopeng.

“Current rebalancing policies, such as consumer goods trade-ins or special treasury bonds, can only partially hedge the downward spiral of domestic demand.”

The retail figures were not helped by an unfavourable comparison with April 2023 that included two public holidays, a big driver of business for the catering and tourism sectors.

“Industrial production continued to accelerate thanks to strong exports, but growth on most other indicators slowed, pointing to softer domestic demand,” said Zichun Huang, China economist at Capital Economics.

“We expect a renewed pick-up over the coming months as fiscal support ramps up again. But any near-term improvement is unlikely to be sustained for long given the underlying structural challenges facing the economy.”

A protracted crisis in the property sector, a key pillar of the economy, remains a major concern for policymakers, consumers and investors.

New home prices fell at the fastest pace in over nine years in April, separate data showed on Friday, as efforts to prop up the ailing sector show few signs of paying off.

Property has been hit by a regulatory crackdown and is still dragging down overall growth, prompting authorities to double down on support efforts.

China on Friday announced plans for local governments to buy “some” apartments and pledged forceful efforts to deliver unfinished homes, as part of a new round of measures to stabilise the crisis-hit property sector.

This post was originally published on Michael West.