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China’s industrial output growth slows down to 17-yr trough

China’s industrial output growth slows down to 17-yr trough

Mubasher: Chinese industrial output expanded at the slowest pace in more than 17 years during July, an indicator to the spreading economic damage of an ongoing trade conflict with the US.

China’s value-added industrial output, a major economic indicator, rose by 4.8% last July, compared with a year earlier, the National Bureau of Statistics (NBS) said on Wednesday.

Meanwhile, analysts polled by Reuters expected industrial output growth to decelerate to a rate of 5.8%, compared with June’s 6.3%.

On a monthly basis, the industrial output edged up 0.19% in July.

A breakdown of the data revealed the production and supply of electricity, thermal power, gas and water rose by 6.9% year-on-year last month, the strongest growth pace among the three major sectors, accelerating 0.3% from the prior month.

Manufacturing output climbed by 4.5% on an annualised basis during July, from 6.2% in June, while mining output retreated to 6.6% down from 7.3%.

The NBS’ disappointing data came at the time when demand stuttered abroad and domestically. The US hiked levies on a wide range of imports from China last May.

Although Beijing has taken measures to boost growth since more than a year, domestic demand remained tepid, with the recently released negative July factory surveys, subdued imports and weaker-than-expected bank loans.

On a side note, retail sales growth weakened in July, lower than the most pessimistic forecast, after an upturn in June that was widely believed to be temporary.

Retail sales grew by 7.6% year-on-year last July, compared with 9.8% in June, and below analysts’ estimate of 8.6% growth.

Moreover, fixed-asset investment rose by 5.7% over the period between January and July, compared with the corresponding period last year, slightly lower than a projected 5.8% gain.

Nevertheless, a closer look on the investment readings by sector would point to a more notable slowdown in major sectors at the beginning of the third quarter.

Private sector fixed-asset investment, which makes up around 60% of China’s total investment, rose by 5.4% in the seven-month period ended last July, when compared with a 5.7% gain in the first half of this year.

Property investment saw a growth of 10.6% over the January-July period, down from 10.9% in the January-June period.

Investment was dragged down by a trembling business confidence, as the world’s second biggest economy has been little responsive to a raft of support measures, with growth losing pace, hitting an around 30-year trough in the second quarter.

Investors grew more worried over a longer and consuming trade conflict between the world’s two biggest economies, which could throw the global economy into recession.

By 7:51 am GMT, the Chinese yuan (CNY) rose against the US dollar, with the USD/CNY pair falling by 0.44% to CNY 7.0124.