China factory output rises, investment up


The retail sales boosted 10.4% from a year earlier, compared with a projection of 10.8% and 11% in June.

"A few sectors, such as steel, seem to have defied this slowdown in economic activity. But the possibility of a sharp drop is unlikely".

Real estate investment in China rose 7.9 percent in January-July period from the same period a year earlier, easing from 8.5 percent growth in the first half of 2017, official data showed on Monday. IP growth slowed to 6.4 percent y/y in July, weighed upon by the mining and manufacturing sectors.

China's factory gate inflation remained steady in July, a positive sign for industrial output and profits.

China's factory output slowed more than expected in July while investment and retail sales also disappointed, reinforcing views that the world's second-largest economy is starting to lose some steam as lending costs rise and the property market cools.

Concerns about the outlook for domestic demand resurfaced last week after Beijing reported weaker-than-expected import and export data.

Although activity and spending came in below expectations, reversing most of improvement seen at the end of the second quarter, industrial production looks unsustainably strong given the growing headwinds to investment growth from policy tightening, the economist said.

Fixed-asset investment had been forecast to grow 8.6 per cent during the first seven months, the same pace as in January-June.

"Combined with the previously released data on trade, demand and production in July visibly slowed in July", said Li Qilin, an analyst with Minsheng Securities.

Liu Shijin, a government advisor from a top think tank, said growth in the real estate sector was expected to slow to a new normal of about 2% in second-half 2017, adding: "It should not be seen as abnormal if there is no growth or negative growth".

Analysts have insisted that cracks will appear eventually, leading to a modest slowdown, but have repeatedly pushed back the timing in the face of resilient data. A government crackdown on riskier types of lending has driven a slowdown in credit growth and pushed up financing costs, which are expected to start weighing on the economy in coming months.

China's economy faces another looming challenge as US President Donald Trump was due to sign on Monday a memorandum to launch an investigation into the Asian giant's intellectual property practices.