China industrial production disappoints in July, retail sales improve

Investing.com-- Chinese industrial production grew slightly less than expected in July as exports, particularly electric vehicles, were hit by increased trade tariffs, while retail sales perked up on some improvement in spending. 

Industrial production grew 5.1% year-on-year in July, government data showed on Thursday. The reading was weaker than expectations of 5.2% and slowed from the 5.3% growth seen in the prior month. 

The softer reading came after Chinese exports weakened in July, as the EV sector was slapped with increased import tariffs by the European Union. 

Increased protectionist policies and sluggish demand in China’s biggest export markets is expected to dent local output, while weak local demand has also weighed in recent months.

But Chinese consumer spending appeared to be picking up slightly, especially after a slew of interest rate cuts in the country through July. Beijing had also flagged plans to improve consumer spending. 

Retail sales grew 2.7% y-o-y in July, compared to expectations for a rise of 2.6% and accelerating from the 2% seen in the prior month. 

Capital spending, however, disappointed, with fixed asset investment growing 3.6% y-o-y in July against expectations of 3.9%.

China’s unemployment rate unexpectedly rose to 4.2% from 4.1%. 

Thursday’s data indicated that the Chinese economy still remained largely frail, with private spending seeing only a limited boost from recent government measures. Increased overseas pressure on Chinese industries could also present a new headwind for the economy.