China: Further slowdown – Standard Chartered

Standard Chartered analysts suggest that their China’s nowcasting model puts GDP growth at 5.7% y/y in July-August, decelerating from 6.2% in Q2.

“Industrial production (IP) growth averaged only 4.6% y/y in July and August, down from 5.6% in Q2. The slowdown reflects both lower demand and destocking by companies on the back of falling profits. In real terms, average retail sales growth edged down to 5.6% y/y in July-August from 6.4% in Q3, dragged down by the normalisation of car sales. Real fixed asset investment (FAI) growth also slowed from Q2 on weaker manufacturing investment. Elevated trade tensions continue to weigh on China’s trade performance, and we expect the contribution of net exports to GDP growth to decline in H2. We expect growth to have improved modestly in September. Early indicators suggest that production activity may have picked up. Infrastructure investment likely continued to recover, and the drag from car sales likely eased. We expect counter-cyclical measures to shore up the economy, with a focus on accelerating rural consumer spending, old town renovation, and construction of logistics and information technology networks.”