China’s industrial output likely slowed sharply in July; retail sales expected to have grown further

China’s July activity data is likely to have been impacted by the severe flood situation in the country. According to a Societe Generale research report, the nation’s industrial production is likely to have slowed sharply to about 0.1 percent on sequential basis in July from June’s 0.5 percent. This would be the most decelerated pace since the seasonally-adjusted data in 2011.

But a robust positive base effect is expected to control the fall in the year-on-year growth pace. On an annual basis, industrial production growth is likely to have fallen marginally to 6.1 percent in July from 6.2 percent in June, noted Societe Generale.

Meanwhile, fixed asset investments’ momentum is expected to have weakened further in the month. Private investments, dominant in property and manufacturing sectors, have been subdued, whereas the state-led infrastructure investments should maintain their pace, said Societe Generale. The year-on-year rate is expected to have rebounded in June due to positive base effects, and therefore a steady year-to-date pace.

In the meantime, retail sales growth in the country is expected to have accelerated again, partially because of a temporary rise in spending due to rainstorms and floods. However, any rise in July requires to be interpreted with caveats, which might not show improving consumption, added Societe Generale.