China July activity data broadly weakened and missed expectations, pointing to a soft start to Q3

Economics Research 17 August 2026 | 6:11PM HKT

China: July activity data broadly weakened and missed expectations, pointing to a soft start to Q3

Bottom line: Lisheng Wang | China’s July activity data weakened broadly from June and missed market Goldman Sachs (Asia) L.L.C.

expectations, pointing to a soft start to Q3 amid continued divergence between resilient exports and subdued domestic demand. Industrial production (IP) growth slowed to 4.5% yoy in July from 5.3% yoy in June, reflecting slower export growth and weaker output growth in ferrous metals smelting, power generation, and pharmaceuticals industries. In sequential terms, IP contracted 0.3% mom non-annualized in July (vs. +1.0% mom non-annualized in June), broadly consistent with last year’s pattern of softer quarter-start momentum. Fixed asset investment (FAI) growth fell to -12.8% yoy in July from -9.3% yoy in June on a single-month basis despite a low base, as unfavorable weather and slow government spending continued to weigh on investment activity. Retail sales growth eased to +0.6% yoy from +1.0% yoy in June despite favorable base effects, mainly dragged down by goods sales. The Services Industry Output Index—which is reported in real terms and closely tracks tertiary GDP growth—also slowed to 4.3% yoy in July from 4.7% yoy in June. Together with our high-frequency trackers for the first half of August, the July activity data point to downside risk to our Q3 real GDP growth forecast of 4.6% yoy.

Industrial production: -5 (5, -1)

Fixed asset investment: -4 (2, -2)

Industrial production (IP): +4.5% yoy in July (GS forecast: +4.6% yoy; Bloomberg consensus: +5.0% yoy), vs. +5.3% yoy in June. Note sequential figures are highly sensitive to the specific seasonal adjustment methodology (NBS estimates: +0.1% mom sa non-annualized in July, vs. +0.8% mom sa non-annualized in June; GS estimates: -0.3% mom sa non-annualized in July, vs. +0.9% mom sa non-annualized in June).

Fixed asset investment (FAI): -6.7% ytd yoy in July (GS: -5.8% ytd yoy; consensus: -6.2% ytd yoy), vs. -5.7% ytd yoy in June; July single-month by GS estimates: -12.8% yoy, vs. -9.3% yoy in June (sequential growth by GS estimates: -6.0% mom sa non-annualized in July, vs. -1.3% mom sa non-annualized in June).

Retail sales: +0.6% yoy in July (GS: +1.5% yoy; consensus: +1.5% yoy), vs. +1.0% yoy in June (sequential growth by GS estimates: -0.4% mom sa non-annualized in July, vs.

Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to

+0.7% mom sa non-annualized in June).

Services industry output index: +4.3% yoy in July, vs. +4.7% yoy in June (sequential growth by GS estimates: +0.2% mom sa non-annualized in July, vs. +0.6% mom sa non-annualized in June).

n Nationwide: 5.2% in July, vs. 5.0% in June. n 31 major cities: 5.2% in July, vs. 5.0% in June.

Property-related activity data:

n Floor space sold: -13.5% yoy in July, vs. -14.2% yoy in June (value of sales: -8.8% yoy in July, vs. -13.9% yoy in June). n Floor area under construction: -12.7% yoy in July, vs. -12.5% yoy in June. n New home starts: -27.8% yoy in July, vs. -26.0% yoy in June. n New home completions: -18.7% yoy in July, vs. -25.0% yoy in June. n Real estate investment: -27.5% yoy in July, vs. -24.2% yoy in June.

1. Industrial production (IP) growth slowed to 4.5% yoy in July from 5.3% yoy in June, reflecting slower export growth and a deeper year-on-year contraction in steel production and demand. Sequentially, we estimate IP contracted 0.3% mom non-annualized in July (vs. +0.9% mom non-annualized in June; Exhibit 1), consistent with last year’s pattern of softer sequential IP growth at the start of each quarter. By industry, the June-to-July deceleration in year-on-year IP growth was led by slower output growth in ferrous metals smelting, power generation, and pharmaceuticals manufacturing industries, more than offsetting faster output growth in computer & other equipment, and electric machinery industries (Exhibit 2). Among major industrial products (different from by-industry IP breakdown), crude steel and cement…