China: Monthly activity data confirm resumption of gradual slowdown – ABN AMRO

According to Arjen van Dijkhuizen, Sr. Economist at ABN AMRO, the monthly activity data published this morning confirm the resumption of the gradual slowdown in Chinese growth.

Key Quotes

“Industrial production growth fell stronger than expected, to 6.0% yoy (May: 6.8%). Fixed investment continued its slide, reaching a record low of 6.0% in June – in line with market expectations. That mainly reflects the ongoing cooling of public investment (including infrastructure spending). The fact that private investment is showing more dynamism is a more positive development.”

“Another positive sign came from the fact that retail sales growth recovered to 9.0% yoy, as May’s number of 8.5% was partly explained by some temporary factors.”

“Earlier this month, the official PMI also signaled cooling conditions in manufacturing. The escalating conflict with the US is affecting the outlook as well. Still, the services PMIs published by Caixin and NBS paint a still bright picture for services.”

“All in all, we think that June data confirm that the gradual slowdown of the Chinese economy has resumed, while downside risks on the external front are rising.”