Rates Cut As Domestic Data Disappoints

MNI (Australia) - Domestic data from China for July came in weaker than expected across the board adding to evidence that the domestic economy is struggling to recover. As a result, key rates were also reduced today (1-yr MTF to 2.5% from 2.65%). Given slowing growth in domestic indicators, there is also the possibility of further policy measures.

• Markets have not reacted strongly to the data given the offsetting effect of rate cuts. Brent crude is up 0.1% and AUDUSD +0.1%. The CSI 300 is down 0.2%.
• Retail sales rose 2.5% y/y in July, slowest since December 2022, down from 3.1% in June leaving the YTD 7.3% down from 8.2%. The softer outcome was due to car sales.
• IP rose 3.7% y/y down from 4.4% but steady YTD at 3.8%.
• Fixed asset investment YTD growth slowed to 3.4% from 3.8% with property investment contracting 8.5% after -7.9%. Property sales rose only 0.7% y/y YTD down from 3.7%, as problems in the sector continue.
• Finally, the jobless rate rose slightly to 5.3% whereas it had been expected to stay at 5.2%.