China Factory Output Beats Forecasts in August but Retail Sales and Investment Deepen Slump

China's industrial output accelerated to 5.2% year-on-year growth in August, beating the 4.8% rise expected in a Reuters poll of 42 analysts and quickening from 4.5% in July. The stronger factory performance, driven in part by surging electronic equipment output, stood in sharp contrast to a deteriorating picture on the demand side, underscoring what the National Bureau of Statistics itself described as an "acute" imbalance between strong supply and weak demand.

Retail sales rose just 0.4% from a year earlier in August, slowing from 0.6% in July and falling well short of the 0.8% gain forecast in both Reuters and Bloomberg economist polls. Urban fixed-asset investment, which covers property and infrastructure, shrank 7.2% year-on-year in the January-to-August period, steepening from the 6.7% contraction recorded through July. The urban unemployment rate edged up to 5.3% in August from 5.2% the prior month.

China's property market offered no relief. Home prices continued to fall in August, extending a prolonged slump that has weighed heavily on household wealth and consumer confidence. The NBS data released Tuesday added to a string of indicators showing the real estate sector remains a significant drag, with property investment already forecast to shrink around 20% for the full year of 2026.

The NBS acknowledged worsening external headwinds and called for stepped-up macroeconomic policy adjustments and stronger measures to boost domestic demand. The data piles pressure on Beijing to act, as the widening gap between industrial activity and household spending points to structural imbalances that export-led factory gains alone cannot resolve.