China GDP disappoints at 4.7% in Q2 as weak spending weighs

Investing.com-- China’s economy grew less than expected in the second quarter, gross domestic product data showed on Monday, as weak consumption largely offset a fledgling recovery in manufacturing activity and industrial production. 

Gross domestic product grew 4.7% year-on-year in the three months to June 30, according to data from the National Bureau of Statistics. The reading was softer than expectations for growth of 5.1%, and slowed from the 5.3% seen in the first quarter. 

Quarter-on-quarter GDP rose 0.7% against expectations for a 1.1% increase. 

The reading indicated that the Chinese economy was cooling as the initial boost from a string of stimulus measures earlier this year wore thin. Soft consumer spending and a battered property market were key drivers of this downturn.

Still, Monday’s data showed China was still on track to meet its 2024 GDP target of 5%. 

Monthly inflation data for the second quarter showed a persistent deflationary trend, especially in Chinese consumer spending. Concerns over slowing growth, higher unemployment and sluggish business activity all saw Chinese consumers drastically scale back spending through the past year.

Still, industrial activity showed some signs of recovery, and was the biggest contributor towards keeping the Chinese economy in expansion territory. 

Separate data on Monday showed industrial production grew 5.3% year-on-year in June, compared to expectations for a 4.9% increase. But the sector may face near-term challenges from increased trade restrictions from the West on China's biggest industries.

Retail sales continued to dwindle, rising 2% against expectations for a 3.3% increase in June. Retail spending slowed from the 3.7% increase seen in the prior month, growing at their slowest pace since December 2022, which was when the country was still grappling with COVID-related restrictions.

China’s unemployment rate remained steady at 5%. Fixed asset investment grew 3.9% in June as expected, while house prices fell at an accelerated pace.

Focus is now squarely on the Third Plenum of the Communist Party of China, a meeting of top-level officials that is likely to offer more cues on the country’s economic outlook.

Government stimulus measures, aimed at manufacturing and the beleaguered property market, have been a key booster of growth so far this year. But investors are still clamoring for more supportive measures