China on Tuesday said it would stop releasing data on its rising youth unemployment as a raft of disappointing figures stoked concerns over the state of the world’s second largest economy.
Shortly before the data dump, the central bank cut a key interest rate in an effort to boost flagging growth.
A slew of disappointing figures in recent months has reflected a slump as China’s post-Covid rebound fades, with joblessness among 16 to 24-year-olds hitting a record 21.3 percent in June.
The country slipped into deflation for the first time in more than two years in July, due to waning consumption and flagging exports.
The National Bureau of Statistics on Tuesday said it would no longer release age group-specific unemployment data starting this month, citing the need to “further improve and optimise labour force survey statistics”.
“Starting from this August, the release of urban unemployment rates for youth and other age groups across the country will be suspended,” National Bureau of Statistics spokesman Fu Linghui said at a press conference.
Overall, unemployment rose to 5.3 percent in July compared with 5.2 percent in June, the NBS said.
As indicators of an economic slowdown have piled up in recent weeks, many experts have called for a large-scale recovery plan to boost activity.
But for the time being, authorities are sticking to targeted measures and declarations of support for the private sector — with little in the way of tangible steps.
Slowing retail sales
Tuesday’s announcement that youth unemployment data would be suspended came as Beijing released a series of weak economic indicators for July.
Retail sales, a key gauge of consumption, grew 2.5 percent year-on-year in July, the NBS said, down from 3.1 percent in June and falling short of analyst expectations. Industrial production grew 3.7 percent in July from a year ago, down from 4.4 percent in June.
“China reported July data that broadly missed expectations. The National Bureau of Statistics report also omitted the unemployment figure for young people, which has soared to record highs in recent months. Again the lack of transparency continues to irk investors,” said Stephen Innes of SPI Asset Management.
Chinese leaders have sought to boost domestic consumption in recent weeks, with the State Council last month releasing a 20-point plan to encourage citizens to spend more in sectors including vehicles, tourism and home appliances.
The country’s top brass have warned that the economy faces “new difficulties and challenges” as well as “hidden dangers in key areas”.
The recent data suggests China may struggle to achieve a five percent growth target set for the year. The economy grew just 0.8 percent between the first and second quarters of 2023, according to official figures.
In a surprise move, the central bank on Tuesday cut the medium-term lending facility (MLF) rate — the interest for one-year loans to financial institutions — from 2.65 percent to 2.5 percent.
A lower MLF rate reduces commercial banks’ financing costs, in turn encouraging them to lend more and potentially boosting domestic consumption.
The Consumer Price Index, the main gauge of inflation, fell 0.3 percent in July, the National Bureau of Statistics said last week.
China slipped into deflation in July for the first time in more than two years, after a short period of deflation at the end of 2020 due largely to a collapse in the price of pork, the most widely consumed meat in the country.
Deflation refers to falling prices of goods and services and is caused by a number of factors, including waning consumption.
And while cheaper goods may appear beneficial for purchasing power, falling prices pose a threat to the broader economy as consumers tend to postpone purchases in the hopes of further reductions.
A lack of demand then forces companies to reduce production, freeze hiring or lay off workers, and agree to new discounts to sell off their stocks — dampening profitability even as costs remain the same.
