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China’s July retail sales, industrial production and fixed assets data were all weaker than expected, notes the research team at TDS.

Key Quotes

“Retail sales rose 8.8% y/y (consensus 9.1% y/y), IP rose 6.0% y/y (consensus 6.3%) and Fixed Assets rose 5.5% (consensus 6.0%).”

“Retail sales growth has now slowed to its weakest since December 2003. This follows data yesterday showing a further slowing in aggregate financing in July though the pace of new loans and M2 growth picked up even as M1 and M0 weakened.”

“If anything the data will spur more pressure for stimulus measures and highlights the trend of recent data showing a slowing in China’s growth momentum.”

“Although China has become a little more concerned about CNY weakness given the recent re-imposition of reserve requirements on forward transactions, the recent bout of CNY depreciation, will have helped to ease financial conditions.”