BEIJING, May 13 (Reuters) - China's
factory output growth was surprisingly muted in April, darkening the outlook
for the Chinese economic recovery and feeding expectations that the government
may take policy action to support activity.
Annual industrial output grew 9.3
percent in April, up from a seven-month low of 8.9 percent hit in March but
still missing market expectations for a 9.5 percent expansion, data showed on
Monday.
"Economic activity is weaker
than expected. This could reinforce the case for the central bank to cut
interest rates," said Zhou Hao, an economist from ANZ Bank in Shanghai.
Fixed-asset investment, an important
driver of China's economy, also missed market forecasts, growing 20.6 percent
in the first four months of 2013 compared with the same period a year ago.
Economists had expected growth of 21 percent.
Retail sales was the only piece of
data that met market expectations, growing 12.8 percent in April from a year
ago.
For investors, the big question now
is whether China's growth recovery is still on track.
Just a few months ago, investors had
lauded the world's second-biggest economy as being in a sweet spot of benign
inflation and rebounding growth.
But hopes that China's economy is
recovering from last year's slump, its worst in 13 years, took a beating after
growth unexpectedly cooled in the first quarter.
April's output figures follow
surprisingly buoyant trade numbers for the month, which many economists suspect
are inflated by firms' attempts to sneak funds into China past its capital
controls. They say true export growth was likely more moderate.
On the other hand, a slightly quicker-than-expected
pick-up in consumer inflation in April suggested Beijing does not have quite as
much room as it might desire to relax monetary policy should growth swoon.
The mixed bag of economic figures
from China this month should encourage investors to look at data from the real
economy for clues on the state of growth. The country's power output numbers
for April, for instance, are due on Tuesday.
Analysts have struggled to track the
turns in China's economy in the past year, often proving to be too upbeat.
Predictions that a mild economic
recovery was under way this year proved overly optimistic after growth
sputtered between January and March. Calls in 2012 for a growth rebound were
also nine months too early, materialising only in the fourth quarter.