Industrial engine powered China’s disjointed economic recovery in July, but retail slump persists

Industrial engine powered China’s disjointed economic recovery in July, but retail slump persists

  • Industrial production in China grew by 4.8 per cent in July from a year earlier, emphasising its role as the main engine of economic growth
  • But retail sales remained weak, with a contraction of 1.1 per cent, a worse performance than analysts had expected

China’s economy continued its rebound into the second half of 2020, but the pace of growth was slower than analysts expected, data released by the National Bureau of Statistics (NBS) on Friday showed.Retail sales were well below consensus last month, shrinking by 1.1 per cent from a year earlier, even as analysts had expected the first monthly gain of 2020 for this vital gauge of consumer spending in the world’s biggest market. Retail sales had dipped by 1.8 per cent in June and 2.8 per cent in May.

July’s figure was behind expectations of 0.1 per cent growth, as per the consensus forecast of a Bloomberg poll of analysts.

The contraction continues the persistent gap between the industrial and consumption engines of the economy. Analysts have consistently warned that supply in China is outstripping demand, as the government struggles to get households to spend their money.

Industrial production, a measurement of manufacturing and mining output in the world’s second largest economy, continued on its four-month growth streak following a contraction in the first quarter, expanding by 4.8 per cent in July from a year earlier, the same pace as June.

This was worse than the consensus forecast of a Bloomberg poll, which had forecast 5.2 per cent growth, but nonetheless hammers home the fact that China’s industrial engine has recovered from the coronavirus shutdown ahead of other parts of the economy.