China's economy loses steam at start of Q2 as consumption, output disappoint in April

BEIJING, May 18 (Reuters) - China's maturation mislaid momentum successful April, with concern output cooling and retail income sinking to implicit three-year lows arsenic the world's second-biggest system wrestled with higher vigor costs from the Iran warfare and persistently anemic home demand.

Better-than-expected exports and China's home fuel-pricing controls person helped upwind the vigor shock, but ‌higher input costs endanger to compression already anemic mill margins and further dampen user spending if the struggle drags on.

Factory output grew 4.1% from a twelvemonth earlier past month, compared ‌with a 5.7% emergence successful March, information from the National Bureau of Statistics (NBS) showed connected Monday, missing a Reuters canvass forecast for 5.9% maturation and marking the slowest maturation since July 2023.

"The beardown show of the exporters helped to mitigate ​the weaknesses successful home demand, but not capable to afloat offset it," said Zhiwei Zhang, president and main economist astatine Pinpoint Asset Management.

Exports gathered gait successful April arsenic factories raced to conscionable a question of orders from AI-related industries and different buyers seeking to stockpile components amid fears the Iran warfare could propulsion planetary input costs adjacent higher.

Zhang didn't expect the authorities to alteration its argumentation stance connected conscionable 1 period of anemic information and said Beijing volition apt reassess its argumentation stance successful July erstwhile the second-quarter GDP information is available.

Retail sales, a gauge of consumption, roseate conscionable 0.2% successful April, cooling sharply ‌from 1.7% successful March and sliding to their weakest summation since ⁠December 2022. The figures were besides good beneath forecasts centred connected a 2% increase.

The fragility of household depletion was underscored successful April home car sales, which dropped 21.6% successful April from a twelvemonth earlier for their seventh consecutive period of decline, adjacent arsenic automakers ramped up efforts to grow successful overseas ⁠markets to offset weakness astatine home.

"Retail income maturation successful the archetypal 4 months of 2026 points to still-weak household demand, with consumers concentrating spending connected selective discretionary and upgrade categories alternatively than broad-based consumption," said Yuhan Zhang, main economist astatine the Conference Board's China Center.

He said the divided highlights a two-speed recovery: dependable spending connected tiny manner and tech upgrades, but anemic appetite for big-ticket, credit-driven purchases tied to lodging and income.

The nationwide survey-based ​jobless ​rate nudged down to 5.2% successful April from 5.4% successful March.

Adding to the gloom, fixed-asset concern (FAI) contracted 1.6% ​in the archetypal 4 months of 2026, compared with a 1.7% emergence successful ‌the January-March play and a 1.6% enlargement forecast.