China’s factory output and consumer spending both slowed in July, new numbers released today by the National Bureau of Statistics showed.
Industrial production rose 3.8% from a year ago. That’s lower than June’s 3.9% year-over-year rate and below economists’ forecast of a 4.3% increase.
Retail sales growth slowed to 2.7% in July, lower than economists’ projection of 4.9%.
Fixed-asset investment gained 5.7% in the first seven months of the year, also worse than the 6.2% projected by economists. Property investment contracted 6.4% in the period.
The official jobless rate fell to 5.4% from 5.5%, but youth unemployment rate hit a record 20%.
In response the People’s Bank cut its medium-term lending rate by 10 basis points to 2.75%. It was the first cut in interest rates since January. China’s central bank was forced to choose between fighting surging inflation or plopping up a sagging economy and picked economic stimulus.
That didn’t stop economists from cutting their projections for China’s growth in 2022. For example, ING Groep cut its full-year GDP forecast to 4% growth. Nomura Holdings kept its projection at 3.3% growth but said the market is still “too optimistic about growth.”
Stocks retreated slightly before moving back into the black. At 12:30 p.m. New York time, the Standard & Poor’s 500 was ahead 0.33% and the NASDAQ Composite was up 0.40%.
Energy markets, however, fell more heavily on fears that a slowing Chinese economy would mean less demand for oil. U.S. benchmark West Texas Intermediate fell 2.79% to $89.52 a barrel after trading as low as $87 a barrel.
China’s weakness and the interest rate cut by the People’s Bank weakened the yuan. The Dollar Spot Index (DXY) was up 0.74% as of 12:30 today.
