China's factory output slows in July
Annual growth in China's factory output slowed to 9.2 per cent in July, the weakest in just over three years and below market expectations, official data showed today.
Official data released today also showed China's annual consumer inflation fell to a 30-month low in July, suggesting that the central bank has ample scope to ease policy again after rate cuts in June and July to keep the economy on track to meet an official 2012 growth target of 7.5 per cent.
China's economy faces powerful headwinds as the euro zone debt crisis and a sluggish US recovery keep global growth at a low ebb, the main factor that pushed China's new export orders in July into their steepest fall in eight months.
"The government underestimated the pace of slowdown and there needs to be more aggressive stimulating policies," said Alistair Thornton, an economist at IHS Global Insight in Beijing. "The government has signalled that it's taking a more aggressive line on stimulus measures ... But it's yet to feed into the real economy, which is why we are seeing such weak activities data for July."
Analysts had forecast China's industrial output to pick up slightly last month to grow 9.8 per cent in July from a year ago, a whisker above three-year lows of 9.3 per cent hit in April.
Retail sales rose 13.1 per cent in July from a year ago, missing forecasts for a 13.7 per cent rise.
Fixed asset investment, which accounted for half of China's net economic growth in the first-half of 2012, grew 20.4 per cent between January and July compared to the year earlier period, in line with expectations for a 20.5 per cent expansion.
The data is likely to reinforce market expectations that China will further loosen monetary policy before the end of September to lift an economy mired in its worst slowdown in three years.