China’s credit in April shrank for the first time as government bond sales slowed, while loan expansion was worse than expected in a sign of weak demand.

Aggregate financing, a broad measure of credit, decreased by almost 200bn yuan ($27.7bn) in April from the previous month, according to Bloomberg calculations of data released by the People’s Bank of China (PBoC) on Saturday. That’s the first time the measure has declined since comparable data began in 2017, reflecting a contraction in financing activity.

A breakdown of the data shows that more government bonds were repaid than sold in the month, contributing to the decline. Financing from shadow banking — which refers to activities outside the formal banking system — also recorded a drop, weighing on overall credit.

Financial institutions offered 731bn yuan of new loans in April, lower than a projected 916bn yuan. The year-on-year growth rate of outstanding loans edged down to 9.1% from 9.2% in March.

“The volatility in this month’s data is tolerable because the government will issue ultra-long government bonds soon, so credit expansion in May and June may make up for it,” said Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc.

The government has sold bonds at a slower-than-expected pace so far this year, helping fuel a rally in sovereign bonds as demand outpaced supply. China’s top leaders at a Politburo meeting last month called for faster issuance of special sovereign and local government special bonds — a major source of funding for infrastructure projects. Beijing plans to issue 1tn yuan worth of special sovereign bonds this year.

Pang said the drop in shadow financing shows authorities’ focus on preventing risks, as the PBoC has stressed in recent months its intention to avoid money idling in the financial system.

April is typically a slow month of borrowing activity, as banks are not in a rush to meet their quarterly lending targets. The PBoC has also refrained from easing monetary policy in recent weeks, to avoid putting more depreciation pressure on the yuan and adding fuel to a government bond rally that’s raised concerns.

The PBoC has emphasized that markets shouldn’t look at the absolute growth rate of credit over the past few months, citing reasons including improving structure of credit that allows emerging industries to get more financial support. In a report published Friday, the central bank said that slower credit expansion is still sufficient to support the economy.

In a sign of sluggish business activity, the money supply measure M1 — which includes cash in circulation and some corporate demand deposits — fell 1.4% in April from a year earlier, the first time it has dropped in more than two years. Household medium and long-term loans, a proxy for mortgages, shrank in April in a reflection of weakness in the property market.

New mid and long-term loans to companies were smaller than the amount recorded a year ago, underlining poor investment demand.

China’s top leaders hinted at more space for policy stimulus during a recent meeting. The Communist Party’s Politburo vowed at the end of April to “make flexible use” of tools including interest rates and the reserve requirement ratio, which determines the amount of cash banks must set in reserve.

Authorities are also stepping up their support for the property market, which has been a major drag on the economy and credit growth. Hangzhou and Xi’an removed all curbs on residential property purchases recently, after the Politburo meeting called for research into ways to deal with unsold homes. A record cut to a reference rate for mortgages in February has failed to reverse sentiment in the housing market.