BEIJING — China reported July data that broadly missed expectations. The National Bureau of Statistics report also did not include the unemployment figure for young people, which has soared to record highs in recent months.
Retail sales rose by 2.5% in July from a year ago, below expectations for a 4.5% increase, according to analysts polled by Reuters.
Industrial production rose by 3.7% in July from a year ago, below the 4.4% increase analysts had expected.
Fixed asset investment rose by 3.4% for the first seven months of the year from a year ago, below the 3.8% forecast by the Reuters poll.
The urban unemployment rate ticked up to 5.3% in July from 5.2% in June.
We must intensify the role of macro policies in regulating the economy and make solid efforts to expand domestic demand, shore up confidence and prevent risks.
National Bureau of Statistics
Contrary to prior reports, the latest release did not break down unemployment by age. The age 16 to 24 category has seen unemployment far above the overall jobless rate, reaching a record high of 21.3% in June.
A spokesperson for the National Bureau of Statistics said the bureau is suspending the youth unemployment number release due to economic and social changes, and is reassessing its methodology.
On a year-to-date basis, real estate investment fell by 8.5% from a year ago as of July, a greater decline than as of June.
China’s massive real estate market has struggled after decades of debt-fueled, rapid growth.
Bloomberg | Bloomberg | Getty Images
Online retail sales of physical goods rose by 6.6% in July from a year ago, a sharp slowdown from double-digit increases in recent months, according to CNBC calculations of official data.
Within retail sales, catering saw the biggest increase of 15.8%, while sports and entertainment products saw a 2.6% year-on-year increase. Big-ticket items such as autos and home appliances saw sales declines in July from a year ago.
Jewelry saw sales drop by 10% during that time.
Retail sales posted the slowest growth since a decline in December, according to official data.
The statistics bureau on Tuesday released retail sales from services for the first time — showing a 20.3% increase for the first seven months of the year from a year ago, pointed out Bruce Pang, chief economist and head of research for Greater China at JLL.
He added that some services sector spending, especially in tourism, isn’t captured by the official data because it looks at businesses operating above a certain scale.
The bureau did not release monthly figures or a monetary amount for retail sales of services.
The statistics bureau noted an “intricate and complicated” situation overseas and domestically, and “insufficient” domestic demand.
“We must intensify the role of macro policies in regulating the economy and make solid efforts to expand domestic demand, shore up confidence and prevent risks,” the bureau said in an English-language release.
Slowing growth, deflation concerns
Domestic demand has remained muted outside of summer tourism. Imports fell by 12.4% year-on-year in July and have mostly declined each month from the same period in 2022.
The consumer price index fell in July, adding to growing worries about deflation.
However, core CPI, which strips out food and energy prices, actually posted its fastest increase in July since January. Factory activity in July picked up to its highest since March, despite a continued decline.
Real estate worries
When asked Tuesday about Country Garden and the real estate slump, statistics bureau spokesperson Fu Linghui said those events have affected market expectations.
But he described the real estate sector overall as being in a period of “adjustment” and that the current “phase” would pass as policy changes took effect. That’s according to a CNBC translation of his Mandarin-language remarks.
Top leaders in late July signaled a shift away from its crackdown on real estate speculation. Authorities have announced a raft of measures to boost consumption, private sector investment and foreign investment.
Earlier on Tuesday, the People’s Bank of China unexpectedly cut a key interest rate called the medium-term lending facility (MLF) — to 2.50% from 2.65%.
The last time the central bank cut by more than 10 basis points was in April 2020, according to Larry Hu, chief China economist at Macquarie.
“To be sure, cutting rate is far from enough. The biggest issue in the Chinese economy right now is the property sector,” Hu said.
“The property sector is at a critical juncture and the key concern is the downward spiral between sales and confidence,” he said. “Therefore, it’s hard for individual developers to save themselves. Policy is the only game changer for now.”
So far the overall approach to additional stimulus has been cautious, especially in real estate.
“Beijing has already done some things to ease the tensions in the property sector, but it has been too slow and too little, in our view,” Ting Lu, chief China economist at Nomura said in a note Monday.
“We believe that at some point in time Beijing will be compelled to take more measures to stem the downward spiral.”