China's factory output disappoints, dashing speedy recovery hopes

STORY: China's economic recovery has lost momentum, according to official data.

Mixed results out Thursday (August 15) showed the world's second-largest economy endured a patchy start to the second half of the year.

Factory output slowed for a third straight month in July.

Industrial output grew 5.1% from a year earlier - down slightly from June and below analyst forecasts.

However, the country's battered consumer sector slightly improved as stimulus targeting households took effect.

Retail sales were up 2.7% in July - higher than a 2% rise in June.

It follows dismal export, prices and bank lending indicators earlier this month.

Some analysts argue Thursday's data puts pressure on policymakers to roll out more support measures aimed at consumers, instead of pouring funds into infrastructure.

Chinese leaders last month signaled they would focus stimulus at consumers rather than infrastructure and manufacturing.

The state planner said last month almost $21 billion raised through special debt issuance this year would subsidize a consumer goods trade-in program.

But a major slump in China's property sector has hurt consumer spending over the past three years.

70% of Chinese household wealth is held in real estate, so consumers have kept their wallets shut tight.

There were few signs of things improving when separate data on Thursday showed China's new home prices fell at the fastest pace in nine years in July.

Calls for more growth boosting measures have followed officials ever since a widely expected post-pandemic recovery failed to appear two years ago.

The government is still targeting growth of around 5% this year.

But some analysts fear China may have entered a prolonged economic malaise similar to Japan's in the 1990s, and that bolder reforms may be needed to revive growth.