Industrial output shrank more than expected in August, the latest warning that the economy and its manufacturers are facing intensifying pressure amid the bitter U.S.-China trade war.

Retail sales, however, expanded at a faster than expected pace, signaling strength in private spending ahead of the consumption tax increase that takes effect Tuesday.

Industrial output fell 1.2 percent in August, government data showed, dropping at a faster pace than the median market forecast for a 0.5 percent decline and almost completely reversing July's 1.3 percent increase.