China’s July data misses across the board as slowdown deepens

China's economy weakened across the board in July, with every major indicator undershooting forecasts in a release that underscored the challenge Beijing faces in sustaining growth through the second half of the year.

Industrial output rose 4.5% year-on-year, down from 5.3% in June and below the 4.8% gain economists had expected, according to data from the National Bureau of Statistics released Monday. Retail sales grew just 0.6%, far short of the 1.5% increase forecast in a Reuters poll and a slowdown from 1% in June. Urban fixed-asset investment, which includes real estate and infrastructure spending, contracted 6.7% in the January-to-July period, steepening from the 5.7% decline recorded in the first half.wsj+1

The urban unemployment rate ticked up to 5.2% from 5% in June. A private survey conducted by the team of Li Daokui, a Tsinghua University economics professor, put the broad unemployment rate at 10.2% as of July, counting people jobless for two years who are no longer covered by official labor force surveys.cnbc

Domestic Demand Stalls

The July figures followed China's slowest quarterly GDP growth since late 2022, when the economy expanded just 4.3% in the second quarter. Goldman Sachs ↘ 0.31% attributed much of the retail weakness to a government trade-in subsidy program that pulled purchases forward and has since become a drag, estimating full-year retail sales growth of roughly 1.5%.cnbc

New bank loans recorded their largest monthly decline on record in July, according to Barclays ↗ 0.18% calculations of official data released last week by the People's Bank of China. Household loans, including mortgages, shrank after a brief recovery in June. The manufacturing purchasing managers' index unexpectedly contracted for the first time since February, as domestic orders slumped and extreme weather disrupted operations.cnbc

Exports a Lone Bright Spot

Exports remained the outlier, rising 23.9% in July from a year earlier, buoyed by the global AI buildout. China's trade surplus reached $687.4 billion in the January-to-July period, putting it on track for another trillion-dollar-plus surplus this year — a point of friction with trading partners who have warned of fresh restrictions.cnbc

The data release itself drew attention after it was moved to 3 p.m. local time from the usual 10 a.m. slot, coinciding with the close of China's stock market. Li Daokui described contracting investment and high youth unemployment as the biggest obstacles to meeting growth targets, calling for government borrowing to more than double this year's planned 12 trillion yuan in new debt issuance.investinglive+1