Lukewarm Chinese economic data, and political instability in France, has dampened market sentiment at the start of the new week. In China, new home prices fell at the fastest pace in almost 10 years in May, new data shows, despite Beijing’s efforts to prop up its property sector.In annual terms, new home prices were down 3.9% from a year earlier, worse than the 3.1% slide in April. During May alone, prices dipped by 0.7%. National Bureau of Statistics (NBS) spokesperson Liu Aihua told a media briefing on Monday that the property market is undergoing adjustment and it will take some time for policy measures to kick in. The declines were broad-based: prices fell in 68 of the 70 cities surveyed by the government, up from 64 in April. Policymakers have been attempting to rein in the oversupply of housing, and support debt-laden developers since the market went into freefall in 2020, hit by the pandemic and a sudden regulatory crackdown on indebted lenders. Last month, the People’s Bank of China cut mortgage rates and allowed local authorities to turn unsold homes from developers into affordable housing. But this has not, yet, revived a sector in which a glut of unoccupied property is weighing on the market. As my colleague Amy Hawkins reported this month: "All across China, from Beijing in the north, to Shenzhen in the south, millions of newly built homes stand empty and unwanted. There were nearly 391m sq metres of unsold residential property in China as of April, according to the National Bureau of Statistics. That is the equivalent of Manchester and Birmingham combined – and then some – sitting as vacant, unwanted property. "The crux of the problem is that, with shaky faith in the economy and big property developers failing to deliver on paid-for apartments, potential homebuyers are keeping their money out of the market." However, China’s property sector isn’t the only area struggling; factories grew slower than expected last month. Industrial output grew 5.6% in May, year-on-year, from a year earlier, NBS data showed, compared with 6.7% in April. Economists had expected growth of around 6%. China’s retail sales were more positive: they beat expectations in May by climbing 3.7% year-on-year, ahead of forecasts of a 3% rise. Overall, investors seem unimpressed, with China’s SSE Composite index dipping by 0.6% today.
The agenda • 9am BST: European Central Bank chief economist Philip Lane speaks at Reuters Newsmakers event in London • 1.30pm BST: New York Empire State Manufacturing Index for June We’ll be tracking all the main events throughout the day ...
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