By Kevin Yao, Ellen Zhang and Ethan Wang

BEIJING (Reuters) -China's industrial output growth slowed to a five-month low in August, while retail sales and new home prices weakened further, bolstering the case for aggressive stimulus to shore up the economy and help it hit its annual growth target.

The sluggish data released on Saturday echoed soft bank lending figures on Friday, underscoring weak growth momentum of the $18.6 trillion economy, the world's second-largest, in the third quarter.

Industrial output in August expanded 4.5% year-on-year, slowing from the 5.1% pace in July and marking the slowest growth since March, data from the National Bureau of Statistics (NBS) showed on Saturday.

That missed expectations for 4.8% growth in a Reuters poll of 37 analysts.

Retail sales, a key gauge of consumption, rose only 2.1% in August despite the summer travel peak, decelerating from a 2.7% increase in July. Analysts had expected retail sales, which have been anaemic this year, to grow 2.5%.

"The momentum is slowing down...The bottleneck remains domestic demand," said Xing Zhaopeng, ANZ's senior China strategist.

China's oil refinery output fell for a fifth month while crude steel output in August fell 6.1% from July, suggesting disappointing demand.

Faltering Chinese economic activity has already prompted global brokerages to scale back their 2024 China growth forecasts to below the government's official target of around 5%. The economy grew by 4.7% in the second quarter.

"The Q3 GDP is likely to be lower than Q2 based on current data flows. We expect large-scale stimulus to come soon," said Xing.

President Xi Jinping urged authorities on Thursday to strive to achieve the country's annual economic and social development goals, state media reported, amid expectations that more steps are needed to bolster a flagging economic recovery.

"As we are already toward the tail-end of the third quarter, time is running low for policymakers to introduce measures to buoy the economy amid numerous headwinds," said Lynn Song, chief China economist at ING.

The protracted property slump has led to Chinese consumers cutting back on spending. Some experts have even proposed distributing shopping vouchers to counter the trend.

Premier Li Qiang said last month the country will focus on stimulating consumption and look at measures to boost household income.

A central bank official said last week China still has room to lower the amount of cash banks must hold as reserves while it faces some constraints in cutting interest rates.