Q2 GDP Below Expectations, Consumer Side Still Appears Soft

China Q2 GDP was weaker than forecast. Rising 0.7% q/q, versus 0.9% forecast (prior was 1.6%). The y/y print was 4.7%, versus 5.1% forecast and 5.3% prior.

• The q/q rise of 0.7% was the weakest since the 2.1% dip in Q2 2022 (last year we saw a 0.8%q/q rise). The y/y pace was the slowest since the start of 2023. This is likely to keep stimulus calls alive, particularly in light of recent credit/inflation data outcomes.
• In terms of the June monthly activity data it was a familiar trend in terms of outcomes. The weak point came in terms of retail sales, which rose 2.0% y/y, versus 3.4% forecast, 3.7% was the prior outcome. Retail spend is back to the late 2022 pace.
• IP growth was 5.3% y/y, versus 5.0% forecast and 5.6% prior. Fixed asset investment was 3.9% ytd y/y, in line with forecasts.
• Property investment was -10.1% ytd y/y, slightly better than forecast but in line with the May outcome. Sale were -26.9% ytd y/y, versus -30.5% in May, so some slight improvement as eased purchased restrictions has spurred more positive transactions in some cities.
• Earlier data showed house prices still falling but at a reduced pace, but we remain some distance from turning positive.

Fig 1: China Industrial Production & Retail Sales Y/Y

Source: MNI - Market News/Bloomberg