China's industrial output growth quickened in January-February, beating expectations, as the vast manufacturing sector started 2021 on a firm footing and the economy consolidated its brisk recovery. Retail sales in the period also rose in a boost to domestic demand, giving a strong lift to business activity on top of the recent upsurge in exports growth.
Industrial output rose 35.1% in the first two months from a year earlier, up from a 7.3% on-year uptick seen in December, data from the National Bureau of Statistics on Monday. That was stronger than a median forecast of a 30.0% surge in a Reuters poll of analysts.
China's ability to contain the coronavirus pandemic before other major economies were able to do so has allowed it to rebound faster, with the recovery helped by robust exports, pent-up demand and government stimulus. While the impressive numbers are in part due to distortions from last year's massive slump in activity, other measures show the recovery is broad-based with industrial output up 16.9% compared with the first two months of 2019, before the pandemic struck.
An NBS official said that positive factors for China's economy are increasing but the foundation for the recovery is not yet solid. A rebound in foreign demand drove export growth in February to a record pace, while factory gate prices posted the biggest expansion since November 2018.
China's economic activity is normally distorted and volatile in the first two months because of the week-long Lunar New Year holiday, which fell in February this year. Retail sales increased 33.8% from a year earlier in the first two months, compared with a rise of 32% tipped by analysts, marking a significant jump from 4.6% growth in December and after a 20.5% contraction for January-February of 2020.
Sales grew 6.4% compared with the first two months of 2019. Fixed asset investment increased 35% in the first two months from the same period a year earlier, slower than a forecast 40.0% jump. That compared with 2.9% on-year growth in 2020, and a 24.5% plunge in January-February last year.
Investment grew 3.5% compared with the first two months of 2019. Private-sector fixed-asset investment, which makes up 60% of total investment, rose 36.4% in January-February, versus a 1.0% increase for the full year of 2020.
China has set a modest annual economic growth target, at above 6%, well below analysts' consensus forecast of more than 8% this year. It was the only major economy last year to report positive growth, with an expansion of 2.3%. Chinese Premier Li Keqiang said the focus for growth this year is on consolidating the economic recovery.