China’s industrial output slowed and retail sales missed forecasts in July 2025

China’s economic engine is sputtering again. July data from the National Bureau of Statistics shows industrial output growth slowing while retail sales came in below what economists had penciled in, adding to a growing pile of evidence that the post-pandemic recovery has run into a wall. The disappointing numbers land at a particularly awkward moment for Beijing. Q2 2026 GDP growth was reported at 4.3%, falling short of both government targets and analyst forecasts, and pressure is mounting on policymakers to do something more aggressive than the incremental tweaks they’ve been leaning on. The numbers tell a familiar story To understand July’s slowdown, it helps to look at where things stood a month earlier. In June 2026, industrial output grew 5.3% year-on-year, a number that actually beat the consensus forecast of 4.7%. Retail sales posted a modest 1% year-on-year increase, which was enough to top expectations of a 0.1% decline. The warning signs were already there. July’s Purchasing Managers’ Index came in at 49.2, sliding below the 50.0 threshold that separates expansion from contraction. That marked the first contraction in manufacturing activity since February 2026, down from...