By Laurie Chen and Albee Zhang

(Reuters) -China suspended publication of its youth jobless data on Tuesday, saying it needed to review the methodology behind the closely watched benchmark, which has hit record highs in one of many warning signs for the world's second-largest economy.

The decision announced shortly after the release of weaker-than-expected factory and retail sales data sparked rare backlash on social media amid growing frustration about employment prospects in the country.

It also marks the latest move by Chinese authorities to restrict access to key data and information, a trend that is unnerving overseas investors.

Fu Linghui, a spokesman for the National Bureau of Statistics (NBS), said the release of data would be suspended while authorities look to "optimise" collection methods.

"In recent years, the number of university students has continued to expand," Fu said. "The main responsibility of current students is studying. Society has different views on whether students looking for jobs before graduation should be included in labour force surveys and statistics."

This issue, as well as the definition of the age range currently set at 16-24, "needs further research," Fu said.

In recent months, China has restricted foreign users' access to some corporate registries and academic journals, and cracked down on due diligence firms operating in the country, a vital source of information on China for overseas businesses.

"The declining availability of macro data may further weaken global investors' confidence in China," said Ting Lu, chief China economist at Nomura, adding that youth unemployment was expected to have risen in July.

At the height of its COVID-19 outbreak late last year, China abruptly changed the way it classified deaths from the disease, a move that fueled criticism abroad and at home.

Tuesday's move has also been met with scepticism at home as young Chinese face their toughest summer job-hunting season.

The most recent NBS data on youth unemployment, published last month, showed the jobless rate jumping to a record high of 21.3% in June.

Some 47% of graduates returned home within six months of graduation in 2022, up from 43% in 2018, state-run China News Service reported last week, citing a private-sector survey.

"If you close your eyes then it doesn't exist," one user wrote on microblogging site Weibo (NASDAQ:WB), where a hashtag related to NBS' decision received over 10 million views.

"There is a saying called 'burying your head in the sand'," wrote another user.