Employees working on an air-conditioner production line at a Midea factory in Guangzhou, China. Jade Gao | AFP | Getty Images
BEIJING — China reported data for July that came in well below expectations as the real estate slump and Covid controls dragged down growth. Retail sales grew by 2.7% in July from a year ago, the National Bureau of Statistics said Monday. That’s well below the 5% growth forecast by a Reuters poll, and down from growth of 3.1% in June. Within retail sales, catering, furniture and construction-related categories saw declines. Sales of autos, one of the largest categories by value, rose by 9.7%. The gold, silver and jewelry category saw sales rise the most, up by 22.1%. Online sales of physical goods rose by 10% year-on-year, faster than in June, according to CNBC calculations of official data. Industrial production rose by 3.8%, also missing expectations for 4.6% growth and a drop from the prior month’s 3.9% increase. Fixed asset investment for the first seven months of the year rose by 5.7% from a year ago, missing expectations for 6.2% growth.
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Investment into real estate fell at a faster pace in July than June, while investment into manufacturing slowed its pace of growth. Investment into infrastructure rose at a slightly faster pace in July than in June. Fixed asset investment data is only released on a year-to-date basis. “This year, the property market overall has shown a downward trend,” Fu Linghui, spokesperson of the National Bureau of Statistics, told reporters in Mandarin, according to a CNBC translation. “Real estate investment has declined, and may have had some impact on related consumption,” he said.
Young people’s unemployment climbs
While the overall unemployment rate in cities ticked lower to 5.4% in July, that of young people remained persistently high. The unemployment rate among China’s youth, ages 16 to 24, was 19.9%. That’s the highest on record, according to Wind data going back to 2018. Fu attributed the high level of youth unemployment to Covid’s impact on businesses’ operations and their ability to hire. In particular, he noted how the services sector, where young people typically account for a greater number of jobs, has recovered rather slowly. Fu also pointed to was young people’s current preference for jobs with more stability. Stable jobs in China typically include those at state-owned enterprises rather than positions at start-ups or smaller companies. “The national economy maintained the momentum of recovery,” the statistics bureau said in a statement. But it warned of rising “stagflation risks” globally and said “the foundation for the recovery of the domestic economy is yet to be consolidated.”