Growth in China's retail sales and industrial production slowed in July, official data showed Monday, with a rebound of Covid-19 dragging on demand while recent floods disrupted businesses.

The world's second-largest economy staged a rapid recovery from last year's coronavirus outbreak, beating back the virus with mass testing and strict lockdowns.

But a flare-up across the country due to the Delta variant has threatened the good news on growth with renewed localised lockdowns and extensive travel restrictions.

Retail sales rose 8.5 percent on-year in July, the National Bureau of Statistics said on Monday, below a Bloomberg consensus forecast of analysts.

This figure was also below 12.1 percent growth in June, likely reflecting the virus resurgence in dozens of places last month, according to analysts.

"The spread of domestic outbreaks and natural disasters have affected the economy of some regions, and economic recovery remains unstable and uneven," NBS spokesman Fu Linghui told a press briefing on Monday.

But he added that "the national economy continues to stabilise and recover" overall.

Industrial production rose 6.4 percent in July, easing as well from the month prior, the NBS said.

China's urban unemployment rate, meanwhile, ticked up to 5.1 percent.

Iris Pang, ING's chief economist for Greater China, told AFP industrial output was weak "because of the semiconductor chip shortage that has affected production".

A shortage of chips has been sending shock waves through the global economy, squeezing supplies of everything from cars to headphones.

Capital Economics' chief Asia economist Mark Williams added in a recent note that a "broad-based slowdown" seen in July was likely caused by disruptions in the final week of the month, due to Covid-19 and the aftermath of flooding in central China.

"There were also reports of production lines being halted as workers were unable to travel to factories," he said.

Asian stocks mixed as China recovery weakens
Hong Kong (AFP) Aug 16, 2021 - Asian stocks were mixed on Monday morning, as the resurgence of the Delta coronavirus variant continued to weigh on economies globally, including in China where new data showed activity slowed more than expected in July.

Retail sales expanded 8.5 percent in July year-on-year and industrial output was up 6.4 percent, according to figures released by Beijing's statistics bureau, with both figures below analyst estimates.

Lockdowns and other movement restrictions brought in to combat the country's recent coronavirus outbreaks have been blamed for hampering economic performance, as well as a series of deadly floods.

"The spread of domestic outbreaks and natural disasters have affected the economy of some regions, and economic recovery remains unstable and uneven," National Bureau of Statistics spokesman Fu Linghui told a press briefing.

But he added that "the national economy continues to stabilise and recover" overall.

Raymond Yeung, chief economist for Greater China at ANZ Banking Group, said the figures "suggest the economy is losing steam very fast".

Surging infections linked to the delta variant of the coronavirus "also adds extra risk to August's activities," he added.

Iris Pang, ING's chief economist for Greater China, told AFP industrial output was weak "because of the semiconductor chip shortage that has affected production".

A shortage of chips has also been sending shock waves through the global economy, squeezing supplies of everything from cars to headphones.

There were dips in Hong Kong, Sydney, Singapore, Taipei and Jakarta, while Shanghai, Wellington and Manila were up.

In Tokyo, the benchmark Nikkei 225 index dropped nearly two percent in morning trade despite government data showing a 0.3 percent rise in GDP -- slightly more than expected after a surge in virus infections and new restrictions.

Mizuho Securities said markets were "expected to be weighed down by drops in US consumer sentiment and a stronger yen".

- 'Potential tapering' -

The University of Michigan reported Friday that US consumer sentiment plunged to its lowest level in a decade, as coronavirus infections continue to surge there.

Long-lingering fears over an end to the US Federal Reserve's vast financial support put in place at the start of the pandemic continued to weigh on sentiment.

Traders will keep an eye on Fed boss Jerome Powell's speech at this month's gathering of central bank and finance leaders in Jackson Hole, Wyoming, hoping for a hint at when he will act.

"Markets are going to have to get comfortable with potential tapering from the US Federal Reserve sometime next year," Martin Lakos of Macquarie Bank told Bloomberg Television.

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Asian markets drop as traders eye Fed move, Delta spread
Hong Kong (AFP) Aug 13, 2021
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