China’s industrial sector gained strength in August as demand for high technology products and artificial intelligence related exports supported factory activity, but weaker consumer spending continued to raise concerns about the health of the wider economy.

Industrial output increased 5.2 percent in August compared with the same month a year earlier, improving from the 4.5 percent growth recorded in July. The stronger factory performance was supported by expanding activity in advanced technology industries, including lithium ion batteries and industrial robots.

However, the improvement in manufacturing has not been matched by stronger household demand. Retail sales increased only 0.4 percent, showing that consumer spending remains under pressure. Investment has also weakened, with fixed asset investment falling 7.2 percent during the first eight months of the year.

China’s property sector remains another major source of economic pressure. Property investment fell by nearly 20 percent, continuing a prolonged downturn that has affected confidence and spending.

The weakness in consumption and the property market has contributed to slower overall economic growth. China’s economy expanded 4.3 percent in the second quarter, marking its slowest growth in more than three years.

The labour market is also facing pressure. Urban unemployment rose to 5.3 percent, while household incomes have remained weak and concerns about job security continue to affect consumer confidence.

The government has introduced measures including additional bond issuance and loan subsidies to support economic activity. However, policymakers have so far avoided major stimulus measures aimed directly at boosting household consumption.

Analysts have warned that stronger support for consumers may be needed if China is to achieve a more balanced recovery. Geopolitical tensions, high oil prices and extreme weather conditions are also adding to the economic challenges facing the country.