BEIJING — China’s economy unexpectedly slowed in July, with activity indicators from industrial output to retail sales missing forecasts by large margins, pointing to a shaky recovery as Beijing shows no sign of easing its zero-COVID policy.
Industrial output grew 3.8% in July from a year earlier, after expanding 3.9% in June, data from the National Bureau of Statistics (NBS) showed on Monday. That compared with a 4.6% increase expected by analysts in a Reuters poll.
Retail sales, which only turned positive in June, rose 2.7% from a year ago, greatly missing analysts’ forecast for 5.0% growth. That compared with a 3.1% growth in June.
The world’s second-biggest economy narrowly escaped a contraction in the June quarter, hobbled by the lockdown of the commercial hub of Shanghai, a deepening downturn in the property market and persistently soft consumer spending.
However, risks to growth abound as many Chinese cities, including manufacturing hubs and popular tourist spots, imposed lockdown measures in July after fresh outbreaks of the more transmissible Omicron variant were found.
Chinese policymakers are trying balance shoring up a fragile economic recovery and eradicating emerging COVID clusters with the economy expected to miss its official growth target this year – set at around 5.5% – for the first time since 2015.
Fixed asset investment, which Beijing had hoped would drive growth in the second half as exports soften, grew 5.7% in the first seven months of the year from the same period a year earlier, versus a forecast 6.2% rise and down from a 6.1% jump in January-June.
The employment situation remained fragile. The nationwide survey-based jobless rate eased slightly to 5.4% in July from 5.5% in June, although youth unemployment stayed stubbornly high, reaching a record 19.9% in July.
In order to prop up growth, the central bank on Monday unexpectedly lowered interest rates on key lending facilities for the second time this year. New yuan loans tumbled by more than expected in July as companies and consumers stayed wary of taking on debt, data showed on Friday.
Official data also showed on Monday that new home prices fell 0.9% in July from a year ago, the fastest pace since September 2015, as the property market, which has been further rocked by a mortgage boycott, showed no signs of improving.
(Reporting by Kevin Yao and Stella Qiu; Editing by Sam Holmes)