China's economic momentum leaks away

<p>Kia ora,</p><p>Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news China seems to be inching toward an economic reckoning.</p><p>But first up today, all eyes will be on the New Zealand CPI inflation rate for the June quarter, which will be released at 10:45am today. It was 6.9% in March and today's consensus expectation is that it will have risen to 7.1%. Variations from that may well shift financial markets. Check back with us then; we will have full coverage.</p><p>Meanwhile, China has <a href="http://www.stats.gov.cn/tjsj/zxfb/202207/t20220715_1886417.html" target="_blank"><strong>reported</strong></a> bad economic activity levels for the June quarter, worse than the poor ones expected. And remember, these are the official data. GDP fell -2.6% in the June quarter from the March quarter, and that undermined the year-on-year expansion to just +0.4%, well below the expected +1.0% and miles lower than the March level of +4.8%. China's goal of a 2022 expansion of "about 5½%" is now lost. The upcoming Party Congress is likely to be a dour affair with a dark economic shadow hanging over it (the date for this Congress hasn't been set yet).</p><p>China's weak GDP result is after they reported a<a href="http://www.stats.gov.cn/tjsj/zxfb/202207/t20220715_1886422.html" target="_blank"><strong>surprise rise in retail sales for June</strong></a>. the +3.1% year-on-year increase for June easily beat market estimates of a flat reading and shifting from a -6.7% drop in May. The latest figure marked the first increase in retail trade since February, as consumption recovered following a drop in pandemic lockdown restrictions.</p><p>After sliding all year, China <a href="http://www.stats.gov.cn/tjsj/zxfb/202207/t20220715_1886421.html" target="_blank"><strong>says</strong></a> its electricity production rose sharply in June, up +1.5% from year ago levels