China’s economy slows across the board in July as retail sales barely grow
BEIJING, CHINA – 2026/07/18: Shoppers stroll along a landscaped path near the POLÈNE luxury goods store in Sanlitun, carrying bags and enjoying the bustling scene.
Sheldon Cooper | Sopa Images | Lightrocket | Getty Images
China’s economy lost momentum across the board in July, as consumer spending stalled and urban investment contracted at a faster pace while unemployment ticked higher, adding to pressure on Beijing to step up support in the second half.
Retail sales eked out a 0.6% growth from a year earlier, according to the National Bureau of Statistics on Monday, missing the estimated 1.5% jump in a Reuters poll, and slowing from 1% in June.
China’s urban fixed-asset investment, including real estate and infrastructure, contracted 6.7% this year as of end-July from a year earlier, worse than the estimated 6% decline in the poll. The decline also steepened from the 5.7% drop in the first half of this year.
Investment in real estate declined 19.2% in the first seven months this year, while infrastructure and manufacturing investment contracted 3.6% and 1.7%, respectively.
Industrial output rose 4.5% in July, undershooting the estimated 4.8% growth and slowing from 5.3% rise in June.
The urban unemployment rate stood at 5.2% in July, ticking up from 5% in June.
The data, which was released at 3 p.m. instead of the usual 10 a.m., reinforced concerns about the health of the world’s second-largest economy that has grappled with a deepening supply-demand imbalance.
Robust industrial production and exports tied to the global AI investment boom have powered headline growth, even as consumption and private investment have weakened amid a prolonged property downturn and volatile energy prices.
The July figures came after the economy posted its slowest growth since late 2022 in the second quarter, expanding just 4.3% from a year earlier. China’s 4.7% GDP growth in the first half year puts the economy on track to meeting Beijing’s growth target range of 4.5%-5%.
A broadening slowdown
China’s retail sales growth has slowed sharply over the past year, with nominal growth easing to just 1.3% in the first half of this year from 5% in the same period last year, according to Goldman Sachs.
The bank attributed much of the slowdown to a government trade-in subsidy program that pulled purchases forward and has since become a drag. “Real momentum was likely even weaker given higher CPI inflation,” Goldman economists said in a note last Friday.
Sales growth will probably stay weak in the second half as fading support from the trade-in scheme continues to depress consumption, leaving full-year growth at about 1.5%, Goldman estimates.
In another sign of persistent weakness in spending, new bank loans issued in July — typically a slow month for lending — recorded their largest monthly decline on record, according to Barclays’s calculations of the official data released last Friday by the People’s Bank of China.
Household loans, including mortgages, shrank in…
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