China’s government skipped giving an update on a politically sensitive spike in unemployment among young people as official data Tuesday showed an economic slump deepened in July.
Meanwhile, the central bank
unexpectedly cut a key interest rate in a sign of growing official urgency about shoring up economic growth that fell sharply in the three months ending in June.
Youth unemployment is sensitive after a survey in June found a record 21.3 percent of potential urban workers aged 16 to 24 couldn’t find work after an economic rebound following the end of anti-virus controls fizzled out.
Publication of unemployment by age group is suspended while the National Bureau of Statistics considers how it measures data, according to a bureau spokesperson, Fu Linghui. Fu said a survey found overall unemployment among urban workers was 5.3 percent, up 0.1 percentage points from June.
“The employment situation is generally stable,” Fu said at a news conference.
Growth in consumer spending decelerated to 2.5 percent over a year earlier in July from the previous month’s 3.1 percent, according to Fu.
Growth in factory output slowed to 3.7 percent from 4.4 percent, according to Tuesday's data, as export demand plunged after U.S. and European central banks raised interest rates to cool inflation. Investment in factories, real estate and other fixed assets rose 3.8 percent, down from June’s 3.4 percent.
“A decision to discontinue the youth unemployment figures just after they hit a record high doesn’t inspire confidence,” said Capital Economics in a report.
The People's Bank of China cut the interest rate on a one-week loan to banks to 1.8 percent from 1.9 percent.
“Today’s cuts suggest that the authorities’ concern about the state of the macroeconomy is mounting,” said Robert Carnell of ING in a report. “But that doesn’t mean that they are about to undertake unorthodox policy measures.”
Economic growth slid to 0.8 percent over the previous quarter in the three months ending in June from 2.2 percent in the January-March period. That is equivalent to 3.2 percent annual growth, which would be among China’s weakest in decades.
Chinese leader Xi Jinping’s government is trying to revive economic activity without resorting to a large-scale stimulus, possibly for fear of reigniting a rise in debt levels they worry are dangerously high.
That is hampered by a slump in China's vast real estate industry following tighter government controls on debt levels at developers. Buyers are reluctant to commit when they are worried about possible job losses and whether construction of apartments they pay for might be suspended.
The ruling Communist Party is trying to revive business and consumer confidence by promising to help entrepreneurs but has yet to announce major spending or other policy changes. Xi's government also is trying to revive interest among foreign investors, but business groups says companies are redirecting or delaying investments due to uncertainty about their status following an expansion of anti-spying rules and calls by Xi and other leaders for national economic self-reliance.
Exports in July plunged by an unusually large margin of 14.5 percent from a year earlier.
The country’s No. 2 leader, Premier Li Qiang, expressed confidence in May that the country can hit the ruling party’s annual growth target of “about 5 percent.” Growth in the second half of the year would need to be markedly stronger than the first half to achieve that.
