China’s property black hole continues to suck life out of the economy, with nothing positive to report from July’s data from the embattled sector.
In fact, the major negative from the data wasn’t the actual weakness but the fact that government measures to try to arrest the slide, as well as two interest rate cuts and moves to lower bank reserve ratios to allow for more lending, have failed to have any impact whatsoever.
National Bureau of Statistics figures show that house prices, investment, and sales all fell for another month in July.
New home prices in 70 cities shrank by 4.9% in July 2024, larger than the 4.5% fall in June. It was the 13th straight month of falls and the fastest pace since June 2015, despite continued attempts by the government to ease the impact of a prolonged property weakness and fragile economic recovery.
Property investment in China fell 10.2% in the first seven months from a year earlier, after dropping 10.1% in January-June, even as the government launched a slew of support measures to bolster market sentiment. Property sales by floor area in January-July fell 18.6% from a year earlier, compared with a 19.0% slump in January-June. And new construction starts measured by floor area fell 23.2% year-on-year, after a 23.7% drop in the first half of the year.
Additionally, funds raised by China's property developers were down 21.3% from a year earlier after a 22.6% fall in January-June.
And the usual data points of retail sales, industrial production, and urban investment were also mixed to weak for last month.
China’s retail sales grew more than expected in July (due to higher food prices), while industrial production was lower than forecast.
Retail sales rose by 2.7% in July from a year ago, beating forecasts of 2.6% growth and above the 2% reported for June.
Industrial production rose by 5.1%, below the poll’s forecast of 5.2% and the 5.3% rise in June.
Fixed asset investment for the first seven months of the year rose by 3.6%, below the 3.9% in June. The infrastructure and manufacturing components also slowed their growth for the year as of July compared to June.
The urban unemployment rate ticked higher to 5.2% in July versus 5% in June and a forecast of 5.1%.
“Pain is being caused while old growth drivers are replaced by new ones,” the statistics bureau said in an English-language version of the release. It noted an “adverse impact” from the external environment and insufficient domestic demand.
The continuing weakness of the data helps explain why China’s 10-year bond yields are down to near record lows (around 2.19%) as banks and other investors seek out safe haven investments amid fears of an approaching economic crunch point.
