China keeps lending rate unchanged as housing market still struggling

China's central bank kept a key lending rate unchanged on Monday, choosing not to loosen credit as data for May showed signs of persisting weakness in the world's No. 2 economy's manufacturing and real estate sectors.

The central bank kept its rate for 1-year medium-term lending facility loans, used as a benchmark for other lending rates, at 2.5%. The decision aligned with expectations: instead of cutting already low interest rates Beijing has focused on channeling spending to areas considered to be high priorities such as high-tech industries.

The government reported Monday that factory output fell 5.6% in May from the year before, slowing from 6.7% in April, though analysts noted some impact due to more work days in this year compared with the year before.

Property investments fell 10% year-on-year and home sales sank 30.5%, suggesting a raft of measures to try to turn around a real estate slump have yet to take hold.

Home prices in major, so-called Tier 1 cities like Beijing and