Industrial production and retail sales in China grew stronger than expected in the first two months of 2026, as domestic manufacturing maintained its positive momentum and local consumer demand received a boost from the Lunar New Year holiday.

Industrial production grew 6.3% year-on-year in the January-February period, government data showed on Monday. This exceeded expectations of 5.3% and markedly accelerated from the 5.2% growth recorded in the previous month.

Retail sales rose 2.8%, compared with expectations of 2.6%, largely driven by increased spending during the Lunar New Year holiday in early February.

Chinese fixed asset investment—a key indicator of capital expenditure—also improved in early 2026, rising 1.8% in the January-February period, compared with expectations for a 5.0% decline. Fixed-asset investment rose for the first time since August 2025, indicating some improvement in business spending as Beijing continued to provide additional fiscal support.

However, China's unemployment rate unexpectedly rose to 5.3% in January-February from 5.1% in the previous month.

Monday's data showed that real manufacturing activity in China—a key driver of economic growth—remained resilient, particularly amid strong export demand for Chinese goods.

The indicator also pointed to an improvement in consumer spending, although it remains to be seen whether the upward trend will continue after the holiday spending.