China's data dump for July is horrible
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Chinese industrial output, fixed asset investment and retail sales figures for July — known as China’s “data dump” — has just been released, and all three figures have missed to the downside.
According to China’s National Bureau of Statistics (NBS), industrial output grew by 6.0% over the past year, below the 6.1% pace expected and 6.2% level seen in June.
Retail sales also underwhelmed, increasing 10.2% from the levels of July 2015. The figure was well below the 10.5% pace expected, and the 10.6% level of June.
Between January to July, fixed asset investment grew by 8.1% compared to same period a year earlier, down on the 9.0% pace recorded in the first half of the year and expectations for a deceleration to 8.8%. It was the lowest level seen in more than 16 years in percentage terms.
Fixed-asset investment includes expenditure on infrastructure, property, machinery and other physical assets in non-rural areas.
Private sector investment rose by just 2.1% over the same period, down from 2.8% in the first six months of the year. In comparison, investment by the government grew by 21.8% between January to July compared to a year earlier, down on the 23.5% pace seen in the first half of the year.
According to Reuters, private investment accounts for about 60% of overall investment in China.
Sheng Laiyun, a spokesman at the NBS, said that the decline in private investment growth is not only related to a lack of market access to services and emerging industries, but also related to funding, policy implementation challenges.
Despite the continued deceleration, he suggested that the structure of investment is improving.
Though all three headline rates are still enormous compared to those seen in other major nations, by the lofty standards set by China in recent years, the figures are a disappointment.
They also followed weak trade and consumer price inflation figures for July released earlier in the week.
“The big concern is still sluggish investment,” Zhou Hao, a Singapore-based senior economist at Commerzbank, told Bloomberg following the release of the data. “The central bank will maintain an easing bias to support the real economy, and a cut in rates or the required reserve ratio this year cannot be entirely ruled out.”
The market reaction to the data has been nonchalant, keeping with the recent theme surrounding major Chinese data releases, with risk assets broadly unchanged from the levels seen prior to its release.
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