China’s Growth Engine Sputters as It Battles U.S. Over Trade China’s economy continued to show signs of cooling, with fixed-asset investment slowing to a nearly two-decade low for the first seven months of the year as trade tensions with the U.S. escalated.
(…) Spending on factory machinery, public-works projects and other fixed-asset investments in China’s nonrural areas grew 5.5% in the January-July period from a year earlier, the National Bureau of Statistics said Tuesday.
The figure matched a record low in 1999, according to Wind Information, and is down significantly from the 8.3% growth recorded for the first seven months of 2017. It was also slower than the 6% increase recorded in the January-June period and undershot economists’ expectations.
Investment, a key growth engine for China, contributed more than a third of China’s economic growth rate last year. (…)
Retail sales in China climbed 8.8% in July from a year earlier, slowing from a 9.0% year-over-year increase in June and lower than economists’ forecast of 9.0% growth.
And unemployment ticked up to 5.1% last month, from 4.8% in June, the statistics bureau said. (…)
The value of homes sold for the January-July period rose 16.2% from a year earlier, official data showed Tuesday. That compared with a 14.8% gain for the first half of the year.
Property investment, including commercial and residential real estate, for the first seven months of the year rose 10.2% from the previous year. That compared with a 9.7% increase for the January-June period. (…)
But infrastructure investment will probably stabilize and accelerate in the second half of the year, Ms. Liu said, as the government moves to pump up the economy in face of a protracted trade conflict. (…)
The regulator also said new lending to infrastructure projects stood at 172.4 billion yuan in July, up 37% from June. (…)
Charts courtesy of The Daily Shot:
Missed Bond Payment Stirs Chinese Debt Fears
A unit of the Xinjiang Production and Construction Corps, an organization with military heritage that runs commercial enterprises for the government, acknowledged in a statement late Monday that it failed to pay back interest and principle for $73 million of onshore bonds.
The XPCC unit, known as the Sixth Division of State-Owned Asset Management, said in a later statement that it planned to pay the debt by Sunday, one week late.
(…) the missed payment will likely encourage banks to be more cautious, even to state-owned entities, said Christopher Lee, an analyst at Standard & Poor’s. Economists estimate that total debt in China rose to 242% of the size of the economy at the end of 2017; a Deutsche Bank analysis of 1,844 local-government financing vehicles found their debts rose to 32.4 trillion yuan ($4.7 trillion) or 41% of GDP in end-June 2017. (…)
German Economy Accelerates in Second Quarter
Germany’s gross domestic product grew at a quarterly rate of 0.5%, or 1.8% in annualized terms, the Federal Statistical Office said Tuesday. It also raised its first-quarter growth estimate to an annualized 1.5% from 1.2% growth reported in May.
Bolstered by the stronger-than-expected figures, the European Union’s statistics agency raised its second-quarter growth estimate for the entire eurozone to 1.5% in annualized terms from 1.4% reported in late July. That means the growth rate was unchanged from the first quarter, rather than the previously reported easing. (…)
Germany’ statistics body said that the pickup in the German economy was led by domestic demand, with a rise in households and government spending. (…)
EARNINGS WATCH
2 more negative pre-announcements bringing the total QtD to 28 positive and 53 negative, nearly 60% negative from 52% in Q2’18.
More worrisome, last 11 days: 2 pos, 20 neg.
Meanwhile, the MSCI World Index saw its 100 dma cross its still rising 200 dma as equity markets outside North America are weighing more and more heavily.
MSCI EX-USA
SPY
The DXY is up 9% since January.
(tradingview.com)