China’s economy lost further momentum in July, with retail sales, industrial output and investment all cooling and manufacturing activity slipping back into contraction, according to data released by Beijing. Retail sales rose just 0.6% from a year earlier, down from June’s 1% pace, while the manufacturing purchasing managers’ index fell to 49.2%, below the 50-point threshold that separates growth from contraction.
Industrial output grew 4.5% year-on-year, a step down from June’s 5.3% gain, and fixed-asset investment fell 6.7% over the first seven months of the year, dragged lower by a 19.2% plunge in real estate investment. The urban unemployment rate ticked up to 5.2% from 5%, adding to signs that softer job prospects are weighing on household spending.
The weak spots were partly offset by strength in high-tech manufacturing, which expanded nearly 14% in the January-July period on booming demand tied to artificial intelligence. Still, economists warned the divergence between strong production and weak consumption is becoming a bigger risk. “The balance of risks to the Chinese economy is shifting into a negative direction again,” said Arjen van Dijkhuizen, an economist who tracks the world’s second-largest economy.
