China’s retail sales, factory activity lagged in July

China’s retail sales and industrial output grew at a slower pace in July, missing analysts’ forecasts and underscoring persistent pressure on the world’s second-largest economy.

According to data released by the National Bureau of Statistics on Monday, industrial output rose 4.5 per cent year-on-year in July, down from 5.3 per cent growth recorded in June and below the 4.8 per cent forecast by analysts.

Retail sales, a key measure of consumer spending, increased by only 0.6 per cent, compared with one per cent growth in June and the 1.5 per cent expansion expected by analysts.

The figures point to weakening domestic demand as China continues to grapple with a prolonged property sector downturn and subdued consumer confidence.

Fixed-asset investment also weakened, declining 6.7 per cent in the first seven months of the year, compared with a 5.7 per cent fall recorded in the January-to-June period.

The slowdown was partly attributed to extreme weather, including high temperatures, heavy rainfall and typhoons that disrupted manufacturing activity in parts of the country.

Despite the weaker domestic economy, China’s exports remained strong, supported partly by global demand for high-tech products and artificial intelligence-related infrastructure.

Analysts said the latest figures highlighted the need for stronger policy measures to stimulate domestic consumption and investment.

Chinese authorities have acknowledged the economic challenges and pledged to step up measures aimed at boosting domestic demand, although major new stimulus measures have yet to emerge.

The weak July data adds to concerns that China’s economic recovery is losing momentum, after gross domestic product growth slowed to 4.3 per cent in the second quarter, below analysts’ expectations.