By Bryan Wong
Investing.com - Chinese economic recovery from COVID-19 took an unexpected stumble, with July’s retail sales and factory output figures both missing analyst forecasts.
According to the National Bureau of Statistics data released on Friday, industrial output grew 4.8% in July year-on-year. The figure was lower than the 5.1% increase in forecasts prepared by Investing.com but remained unchanged from June.
Meanwhile, retail sales dropped 1.1% year-on-year, an improvement from the 1.8% drop recorded in June but still below the forecasted increase of 0.1%. Sales also recorded a seventh consecutive month of declines, attributable to weak consumer demand due to COVID-19.
Unemployment remained unchanged at 5.7%.
“Clearly the hope for a fast recovery has faded - the consumption still lags behind and the job market is still under pressure,” Zhou Hao, senior Emerging Markets economist at Commerzbank AG (OTC:CRZBY), told Bloomberg.
With policy makers emphasizing risk control and rolling back some stimulus, “growth momentum will be slowing down in near future,” he added.
China saw its recovery quicken in the second quarter after easing COVID-19 lockdown measures in April, with demand, stimulus measures and surprisingly resilient exports all contributing to the speed. But high unemployment, leading to continuously weak consumer demand, is proving to be an Achilles heel.
Meanwhile, the People’s Bank of China said on the same day that it would add short-term funds into the financial system, the most since May, to improve liquidity.