Slowdown in China’s industrial production, retail sales likely to be temporary, says ANZ Research

The slowdown in industrial production (IP) and retail sales in July is likely to be temporary; we expect a rebound in the upcoming months. IP growth slowed to 6.4 percent y/y in July, weighed upon by the mining and manufacturing sectors. It is believed that a part of the slowdown stemmed from adverse weather conditions, whose effects will likely falter in the upcoming months.

Headline growth of retail sales decreased to 10.4 percent y/y in July from prior 11 percent. However, online sales remained quite vibrant, rising 28.9 percent y/y in the month, and are likely to continue to offset the moderation in growth among traditional retailers.

The growth of property investment eased to 7.9 percent y/y between January and July, the lowest this year. This seems to suggest that the government’s tightening policies have finally trickled down through the economy. However, land sales income for local provincial governments continued to surge 37.3 percent y/y in July.

"We continue to think the correction in the property market will be only moderate, even though the growth in property investment slowed further in July," ANZ Research commented in its latest report.

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