China retail sales growth slowed sharply to 2.8% yoy in August , down from July’s 8.5% yoy, well below expectation of 7.1% yoy. China industrial production growth slowed further to 5.3% yoy, below expectation of 5.8% yoy. Fixed asset investment rose 8.9% ytd yoy, below expectation of 9.1%.

In a released, the National Bureau of Statistics said, “generally speaking, in August, the national economy maintained the trend of recovery. However, we must be aware that the international environment is still complicated and severe. At home, it has been felt that the sporadic outbreak of COVID-19 and natural disasters such as floods had caused impact on the economy, and the foundation for the economic recovery still needs to be consolidated”.

China’s manufacturing sector unexpectedly shrank in May, with Caixin PMI falling to 48.3 from 50.4, well below market expectations of 50.6. This marked the first contraction in eight months and the lowest reading since September 2022.

According to Caixin Insight’s Wang Zhe, both supply and demand weakened, with a particularly notable drag from overseas demand. Employment continued to contract, pricing pressures remained subdued, and logistics saw moderate delays. Although business optimism saw a marginal recovery, the broader picture points to intensifying headwinds.

The report highlights the fragile start to Q2, with Wang pointing to a “marked weakening” in key economic indicators and a “significantly intensified” level of downward pressure.

Full China Caixin PMI manufacturing release here.

Released over the weekend, China’s official PMI Manufacturing declined from 51.9 in March to 49.2 in April, falling short of expectation of 51.4. This drop also brought the reading below the 50-mark, signaling the first contraction in manufacturing activity this year.

A significant contributor to the decline in the headline indicator was the new orders sub-index, which dipped to 48.8 from 53.6, suggesting a decrease in market demand. Additionally, new export orders decreased to 47.6 from 50.4, reaching a three-month low.

Senior NBS statistician Zhao Qinghe attributed the contraction in April to a lack of market demand and the high-base effect resulting from the rapid manufacturing recovery in the first quarter. The chemical fiber, ferrous metal mining, and processing sectors have experienced slowed production due to weak market demand, while the special equipment and electrical and mechanical equipment sectors continue to expand, according to a separate NBS statement.

PMI Services index also fell, dropping from 58.2 to 56.4, below the expected 57.0, but it remains the second-highest reading this year. The composite PMI, encompassing both manufacturing and non-manufacturing activity, declined to 54.4 from 57.0.

China Caixin PMI Manufacturing dropped to 51.5 in December, down from 51.8, missed expectation of 51.7.

Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “China’s manufacturing economy continued to stabilize in December, although the expansion in demand was not as strong as the previous two months. Positive changes included improved business confidence, and strengthened willingness to increase production and inventories, which are beneficial to the job market. Subdued business confidence was a major factor behind the economic slowdown this year. As the phase one trade deal between China and the U.S. has sent out positive signals, there is room for a recovery in business confidence, which should be able to help stabilize the economy.”

Full release here.