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- Retail sales grew 0.6% in July from a year earlier, missing the estimates of 1.5% jump.
- China’s urban fixed-asset investment, including real estate and infrastructure, contracted 6.7% in the January to July period.
- Industrial output rose 4.5% in July, undershooting the estimated 4.8% growth.
- The urban unemployment rate stood at 5.2% in July, ticking up from 5% in June.
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 the 1% growth 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 China posted its slowest GDP 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%.
China must “accelerate the transition to new growth drivers,” the statistics bureau said in an English-language release. It also called for greater reforms and opening up further.
Statistics bureau spokesperson Fu Linghui said that geopolitical pressure abroad and high temperatures domestically impacted China’s economy in July. While acknowledging that key economic metrics softened last month, Fu pointed to 5% growth in services retail sales over the first seven months of the year, versus 1.1% jump in retail sales of goods.
A broadening slowdown
The latest data point to “further downside risks” that call for a more effective policy response, said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, raising his expectations for an interest-rate cut by the People’s Bank of China.
While the Chinese top leadership last month pledged stronger fiscal spending, implementation and transmission will take time, Zhang said.
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 July after a brief recovery in June, according to CNBC’s calculation of official figures, amid soft housing activity and a weak labor market.
Mortgage demand has weakened through the multi-year property downturn, while banks, wary of borrowers’ repayment capacity, have grown more reluctant to lend.
The jobs picture may be worse than official figures suggest. A private survey conducted by the team of Li Daokui, a professor of economics at Tsinghua University, showed China’s broad unemployment rate at 10.2% as of July, significantly higher than the official figures of around 5%.
The survey, counting in people who have been jobless for the past two years and are no longer covered in the official labor force survey, also showed that more than half of the roughly 24 million long-term unemployed are aged 16 to 24. Official youth unemployment rate stood at 14.9% in June, the highest rate for the same month since the government excluded university students from the sample more than two years ago.
Behind the weak hiring is a slump in investment. Urban investment declined for the first time in decades last year, falling 3.8% from a year earlier, and has deteriorated further this year, as the property downturn and tighter constraints on local governments’ borrowing hampered one of China’s traditional growth drivers.
The intensity of pullback in investment has been “unprecedented,” said Li, describing the contracting investment and high youth unemployment as the biggest obstacles to China meeting its growth targets. Li called for a substantial expansion in government borrowing to more than double this year’s planned 12 trillion yuan ($1.7 trillion) in new debt issuance.
Factory and construction activity also lost momentum in July, with the official manufacturing purchasing managers’ index (PMI) unexpectedly contracting for the first time since February, as domestic orders slumped and extreme weathers, like typhoon and heavy rainfalls, disrupted port activity and business operation last month.
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Exports remain a rare bright spot in a cooling economy, with the global AI buildout helping offset headwinds from the Middle East conflict. Exports rose 23.9% in July from a year earlier, beating estimates, after a 27% surge the previous month that was the fastest since 2021. Imports climbed 27.5%, short of forecasts.
Beijing’s massive trade surplus has become a standing grievance for its trading partners, raising the risk of fresh trade restrictions aimed at forcing a trade rebalancing from Beijing, analysts say. China’s trade surplus reached $687.4 billion in the January-to-July period, putting it on track for another trillion-dollar-plus surplus in 2026.
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