In a worrying sign about the progress towards economic recovery in China, retail sales registered a worse than expected decline during July even as factory output rose at a slower than forecast pace for the month. Retail sales in China reduced by 1.1% YoY in July, better than the 1.8% fall seen in the previous month, but far worse than economists’ forecast of a 0.1% decline.

Retail sales fell for the seventh consecutive month as a result of the pandemic, with consumers remaining cautious about spending even after China emerges out of lockdown and resumes normal levels of activity. Economists had anticipated a smaller decline in retail sales fueled by pent up domestic demand and supported by fiscal stimulus efforts rolled out by the government.

Meanwhile, according to data released by the NBS, industrial output increased by 4.8% YoY – the same pace of growth seen in June. However, the increase in industrial output was less than economists’ expectations for a 5.1% rise.

Fixed-asset investment in the country declined by 1.6% YoY between January and July – improving after having fallen by 3.1% during H1 2020. Fixed-asset investment in the private sector fell by 5.7% during the period, picking up after a 7.3% reduction seen during the first half of the year.