China's July Data Shows Slowing Economy, Weak Retail Sales

China's economic momentum softened in July, according to fresh government data, with retail sales growth easing and the manufacturing sector slipping into contraction territory.

Retail sales of consumer goods rose just 0.6% year-on-year in July, a slowdown from the 1% growth recorded in June. The total value of retail sales reached 3,902.2 billion yuan (approximately USD 578.7 billion), showing a marginal 0.06% increase month-on-month.

The Manufacturing Purchasing Managers' Index (PMI) fell to 49.2 in July, dipping below the 50-mark that separates expansion from contraction. The Production and Operation Expectation Index, however, remained relatively optimistic at 54.1.

Investment trends painted a mixed picture. Fixed-asset investment, excluding rural households, totalled 26,032.8 billion yuan (USD 3.86 trillion) in the first seven months, down 6.7% year-on-year. Excluding real estate development, this decline was a milder 3.7%.

Sector-wise, real estate development investment plunged 19.2%, while infrastructure investment fell 3.6% and manufacturing investment dropped 1.7%. In contrast, investment in high-tech industries grew 5.0%, with notable gains in information services (19.2%), aerospace vehicle and equipment manufacturing (12.3%), and electronic and communication equipment manufacturing (7.1%).

Industrial output expanded 4.5% in July, easing from June's 5.3% pace. The urban unemployment rate edged up to 5.2% from 5.0%, a factor likely weighing on consumer confidence and spending.

Meanwhile, production and supply of electricity, heat, gas, and water increased by 5.4%. Core CPI, which excludes food and energy prices, rose 0.9% year-on-year in July, and 1.1% for the first seven months combined.