Power use growth lowest in 16 months

China's power consumption, a barometer of economic activity, increased 3.7 percent in April to 389 billion kilowatt-hours, the slowest in 16 months, data from the National Energy Administration showed on Monday.

The growth rate was 3.3 percentage points lower than that of the previous month, and 7.5 percentage points slower year-on-year. It was the lowest rate since Jan 2011.

"The monthly decrease was a normal phenomenon due to seasonal factors but the sharp decrease in year-on-year growth was more of a result of the slowing economy," said Xue Jing, director of the statistics division at the China Electricity Council.

Furthermore, power consumption in April 2011 was pushed up to a peak high by expansion in market demand and infrastructure construction because of massive investment stimulus, Xue said.

Less power consumption in industrial sectors, which dropped to only 1.56 percent from 11.2 percent last year, was a main reason for the decrease. Power consumption by residents and service sectors still maintained double digit growth.

"It (less power consumption in industrial sectors) is because of sluggish exports due to weak external demand," said Ouyang Changyu, assistant secretary-general with the China Electricity Council.

The operating rate of domestic manufacturers was lower than expected, while the traditional heavy industries such as steel and nonferrous metals are continuing their low growth in electricity consumption in the first quarter, Ouyang said.

The news was in line with decreasing industrial output in April. It grew 9.3 percent year-on-year, 2.6 percentage points less than the previous month.

But the economy has already showed signs of recovery, Xue said, citing the evidence of increasing prices of steel, coal and chemicals at factory gates. "Although the signal is still pretty weak and may be capricious, it reflects a returning confidence in the market," Xue said.

As a result, China may still face power shortages at about 30 million kwh, according to China Electricity Council.