SATV, Kathmandu, Sept. 16 - China's retail sales grew last month at their slowest pace since May, official data showed on Tuesday, as the country's leaders struggle to reverse a persistent slump in spending.

The 0.4 per cent year-on-year increase in August, released by the National Bureau of Statistics, marked the second successive slowdown in growth following a one per cent increase in June. 

It also missed the 0.8 per cent lift predicted in a survey of economists by Bloomberg, though it was better than the 0.6 per cent shrinkage in May.

Beijing has grappled with sluggish domestic spending since the end of the Covid-19 pandemic, with stagnant activity weighing down national growth even as exports boom. Industrial production expanded 5.2 per cent in August, the NBS said, a jump from July's 4.5 per cent growth and better than Bloomberg's forecast of 4.8 per cent.

China's economy "operated steadily" in August, the NBS said in a statement, while also acknowledging that "adverse external factors are intensifying". 

"The domestic imbalance between strong supply and weak demand remains pronounced, some firms face operational difficulties and the foundation for steady economic improvement requires consolidation," it said.

Authorities are pursuing an official growth target this year of between 4.5 and 5.0 percent -- the lowest goal in decades. However, Tuesday's data also showed fixed-asset investment contracted 7.2 per cent year-on-year in August, which was more than expected.

"China's economy continues to show diverging signals, as consumption and investment remain weak while industrial production maintains the momentum," Zhiwei Zhang, President and Chief Economist at Pinpoint Asset Management, wrote in an analyst note.

"The economy faces downside risk in (the third quarter) as the fiscal support takes time to be implemented and transmitted to the economy," he added.