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China’s factory output and retail sales growth slowed sharply and missed expectations in July, as new COVID-19 outbreaks and floods disrupted business operations, adding to signs the economic recovery is losing momentum.
Industrial production in the world’s second largest economy increased 6.4% year-on-year in July, data from the National Bureau of Statistics (NBS) showed on Monday. Analysts had expected output to rise 7.8% after growing 8.3% in June.
Retail sales increased 8.5% in July from a year ago, far lower than the forecast 11.5% rise and June’s 12.1% uptick.
China’s economy has rebounded to its pre-pandemic growth levels, but the expansion is losing steam as businesses grapple with higher costs and supply bottlenecks. New COVID-19 infections in July also led to fresh restrictions, disrupting the country’s factory output already hit by severe weather this summer.
Asian share markets slipped on Monday after the data showed a surprisingly sharp slowdown in the engine of global growth.
Data earlier this month also showed export growth, which has been a key driver of China’s impressive rebound from the COVID-19 slump in early 2020, unexpectedly slowed in July.
Consumption, industrial production and investment could all slow further in August, analysts from Nomura said in a note, due to COVID-19 controls and tightening measures in the property sector and high-polluting industries.
Production controls sent crude steel output to the lowest monthly level since April 2020 in July.
Meanwhile China tightened social restrictions to fight its latest COVID-19 outbreak in several cities, hitting the services sector, especially travel and hospitality in the country.
