China’s economic slowdown deepened due to weak domestic demand and a series of key indicators lacked expectations.

Retail sales last month rose 3.4% last month from a year ago, analyst estimates were missing estimates of a 3.9% increase in Reuters polls and a decline from a 3.7% growth rate in July, according to the National Bureau of Statistics.

Industrial output growth slowed to 5.2% in August, while July’s 5.7% growth was the weakest since August 2024, according to LSEG data. Economists expect to remain the same as last month’s data.

Investment in fixed assets was reported from one year to the end, expanding by only 0.5%, a sharp slowdown from the 1.6% expansion between January and July and lowered economists’ forecast of growth of 1.4%.

Government data shows that the contraction in real estate investment has worsened in the segment, down 12.9% in the first eight months. Investments in the manufacturing and utility sectors, including electricity, fuel and water supply, increased by 5.1% and 18.8% respectively over the same period last year.

Yuhan Zhang, chief economist at the China Center of the Conference Committee, said that the manufacturing investment in fixed assets was “modest and uneven”, citing weak investments in infrastructure, advanced technologies and industries that were driven by policy-driven state investment.

In August, China’s survey-based urban unemployment rate rose from 5.2% last month. The Bureau of Statistics attributes the rise in unemployment to the graduation season.

“We should be aware that there are many instability and uncertainty in the external environment, and that the national economic development still faces multiple risks and challenges,” the Bureau of Statistics said in its English version.

“We must fully implement macro policies and focus on maintaining employment, businesses, markets…the expectations are stable, deepen reform, openness and innovation to promote stable and healthy economic development.”

Zhang pointed out that service consumption gained momentum under the leadership of travel, leisure and transportation, which indicated a gradual shift in spending to services.

Retail sales, excluding automobile consumption, rose 3.7% over the same period last year. Consumption growth in rural areas exceeded urban centers, with August rising 4.6% from a year ago.

NBS spokesman Fu Linghui said at a press conference that it is difficult to say whether consumer inflation has reached a turning point, while expecting consumer prices to remain volatile.

China’s consumer price index falls Beyond last month’s expectationsdown 0.4% from the same period last year, while the downturn in producer prices lasted for the third year.

FU acknowledges uncertainty surrounding “import inflation” – prices of imported goods are likely to increase due to reasons such as weak yuan, rising global commodity prices and rising tariff rates. He also noted that support from “counter-revolutionary” policies targeting excessive competition and price wars that will eventually “spill” to manufacturers of consumer prices.

Among the largest growth categories in August, sales of gold, silver and jewelry rose 16.8%, while sales of sports and entertainment products rose 16.9%, while sales of furniture rose 18.6% over the same period last year.

The biggest lag behind in consumption is oil, as well as tobacco and alcohol-related products.

Shortly after China’s economic data was released, the mainland’s CSI 300 index was nearly 1%.

“The slowdown is not surprising to the market,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, after both exports and financial support from Beijing faded out.

Zhang added that Beijing’s fiscal policy may be “more supportive in profit margins”, but is unlikely to have large stimulus measures unless Beijing sees the economy at risk of lacking its 5% growth target.