📉 The Chinese economy continues to falter due to increasing pressure from the trade war.
🔶Industrial output in July increased by only +5.7% YoY, lower than the forecast of +6.0% and the +6.8% of June.
–> Production motivation is rapidly declining due to labor exports.
🔶 Retail sales dropped to +3.7% YoY, the lowest since January 2025, below the expectation of +4.6%
Household consumer sentiment remains defensive, signaling the health of the labor market and expectations for future income.
🔶 Fixed asset investment increased by only +1.6% YoY, the lowest since March 2020, mainly due to real estate continuing to fall freely and the private sector narrowing CAPEX plans.
⚠️The unemployment rate rose to 5.2%, exceeding the forecast of 5.1% and the 5.0% from the previous month.
China's unemployment data has long been suspected of being manipulated ( to flatten the figures), yet last month it still surged, indicating that the unemployment rate has reached a very serious level.
→ These facts confirm the warning from the credit report 3 days ago: new credit growth has dropped to its lowest historical level, indicating that the Chinese economy is entering a stress zone.
China is facing the risk of growth <4% in 2025. The market is pricing in the possibility of further depreciation of the CNY and a continued deflationary spiral.