CHINA’S economy failed to pick up after its worst stretch in five quarters, with an uneven recovery in July held back by consumer spending still lagging industrial activity and investment.
Industrial output rose 5.1 per cent from a year ago, the National Bureau of Statistics said Thursday, down from June’s increase of 5.3 per cent. The median forecast of economists surveyed by Bloomberg was 5.2 per cent.
Retail sales climbed 2.7 per cent, slightly better than forecast and up from 2 per cent growth in the previous month.
The economy was “overall stable” in July with some improvement, the NBS said in a statement. “There’s an increasing negative impact from the changing external environment, while domestic demand remains insufficient. The switch from old to new growth drivers is causing temporary pains.”
The latest snapshot of the US$17 trillion economy shows domestic demand is barely benefiting from recent government efforts to boost consumption and rectify imbalances in China’s recovery.
Relief for the consumer is unlikely so long as China’s real estate slump squeezes household budgets. Though the government rolled out its biggest rescue package for the property sector in May, it has yet to help the market bottom out quicker.
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Investment in property development plunged 10.2 per cent year on year in the first seven months of the year, after dropping 10.1 per cent in the January-June period. That weighed on fixed-asset investment, which rose 3.6 per cent in January-July, slower than a gain of 3.9 per cent in the first six months.
The urban jobless rate was 5.2 per cent, versus 5 per cent as of the end of June.
An absence of a meaningful recovery in the economy is likely to amplify calls for additional policy stimulus as Beijing chases its annual growth target of around 5 per cent.
China’s top leaders already signaled a more supportive stance toward growth at a recent Politburo meeting by vowing to shift their focus to consumption, though the broad pledges have been met with skepticism in the market.
Figures released earlier this month already provided evidence of a weak start to the third quarter. China’s export growth unexpectedly slowed in July as overseas orders began to soften, while the country’s bank loans to the real economy contracted for the first time in 19 years. BLOOMBERG
