China's economic growth lost steam in April as industrial output and retail sales growth sharply missed expectations as the Asian powerhouse grappled with higher energy costs from the Iran war and sluggish domestic demand.
Data from the National Bureau of Statistics (NBS) showed on Monday that factory output grew 4.1% from a year earlier last month, compared with a 5.7% rise in March and a Reuters poll forecast for 5.9% growth. It marked the slowest growth since July 2023.
Retail sales, a gauge of consumption, rose just 0.2% in April, cooling sharply from 1.7% in March and marking the weakest gain since December 2022. The figures were also well below forecast centered on a 2% increase.
Household consumption has remained fragile. Domestic car sales dropped 21.6% in April from a year earlier, marking the seventh straight month of decline, even as automakers ramped up efforts to expand in overseas market to offset weakness at home.
Adding to the gloom, fixed-asset investment contracted 1.6% in the first four months of 2026, compared with a 1.7% rise in the January-March period.
Economists pointed to a drop in the official construction purchasing managers' index, and heavy rainfalls in parts of southern China as some of the factors dragging on investment growth.
The April figures offered early signs that China's first-quarter momentum was already fading.
The economy expanded 5.0% in the first three months of the year, at the upper end of Beijing's full-year target range of 4.5% to 5.0%. But analysts have warned that the recovery is running on uneven ground as industrial output continues to outstrip domestic demand.
While a protracted downturn in the property market remains a drag on growth, the Middle East conflict has exposed the economy to external risks at a time of fragile consumption at home.
China's property investment contraction widened in April year-on-year.
Better-than-expected exports and China's domestic fuel-pricing controls have helped weather the energy shock, but higher input costs could squeeze manufacturers' margins and further hurt household spending if the conflict drags on.
Top Chinese leaders have pledged to strengthen the country's energy security, accelerate technological self-sufficiency and seek greater control of supply chains in response to external shocks.
The Politburo also reiterated China's "proactive" fiscal stance and "appropriately loose" monetary policy, language broadly in line with previous meetings and suggesting no imminent additional stimulus plans.
