China's power use contracts in August

BEIJING - China's power consumption contracted for the first time this year in August, another sign of slow growth, official data showed on Tuesday.

Electricity consumption, a broad measure of economic vitality, dropped 1.5 percent year-on-year to 502 billion kwh last month, the first contraction this year, according to data from the National Energy Administration (NEA).

That was in contrast to rises of 3 percent in July and 5.9 percent in June.

The contraction in August dragged the growth rate in the first eight months down to 4 percent, compared with 4.9 percent in the January-July period.

During the first eight months, electricity use by primary industry edged up slightly by 0.3 percent from a year earlier. Power consumption by the manufacturing sector rose 3.9 percent, compared with 4.7 percent seen in the first seven months. Power use by the service sector rose 5.8 percent in the January-August period to 442 billion kwh, slower than the 6.5 percent in January-July.

Residential power also contracted to 3.8 percent from 5.7 percent in the first seven months.

As a result, generating capacity was left idle. The average operational time of power plants dropped by 146 hours in the first eight months, widening from 102 hours in the first seven months.

Most major economic indicators released over the weekend, including industrial production growth, fixed-asset investment and retail sales, have pointed to a slowdown in the third quarter following a rebound in the second.

China's industrial output growth, which is one of the best leading indicators for GDP growth, stood at 6.9 percent in August, its weakest since December 2008.

Some economists predicted China's power use in August would slow, given the cool summer this year.

"We believe that power use and output are heavily affected by weather, and the summer last year was unusually hot while the summer this year has been quite cool," Lu Ting, chief China economist with Bank of America Merrill Lynch, said in a earlier note.

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