The Chinese economy was already wobbly and the beginning of the second half of the year saw it stumble further.
This was because the decline in the property sector appears to have intensified, factors have unexpectedly moved back to the slow lane and job cuts continue to be a menace.
Manufacturing activity and property issues
Caixin conducted a private poll, which showed that their growth in manufacturing activity was slower than expected in July after it had surged in June when COVID-19 curbs were lifted.
This came after an official survey on Sunday, which was bearish and highlighted that there had actually been a contraction in manufacturing activity in the previous month.
China Index Academy is one of the largest and independent real estate research companies in the country and it posted results of a poll on Monday.
They showed that there was a 33.4% slump in property sales in 17 cities in July, as opposed to an 88.9% jump that had been recorded in June, post-lockdowns.
It showed that the market was filled to the brim with desperate sellers, which had prompted buyers to shun them.
Last week, the top leaders of the country said that they were prepared to miss the GDP target of the government of about 5.5% for the year.
This year is an important one for China, as it is expected that President Xi Jinping will secure a third leadership term, thereby breaking the precedent.
There was just 0.4% growth in the GDP in the second quarter, but authorities have not added any stimulus so far because of uncertainties due to the Russia-Ukraine war, worries about a global recession, and the possibility of recurring COVID-19 lockdowns in the country.
Market analysts said that everyone is now worried about stagnation since the second quarter GDP has declined.
Therefore, the recovery of consumption needs to be quick in the second half. June had seen an improvement in retail sales by 3.1% and the jobless rate had also come down to 5.5% from 5.9%.
However, the widespread uncertainty regarding jobs means that consumer sentiment continued to remain fragile.
The Caixin survey showed that there was a decline in factory jobs to their lowest in 27 months. This decline was because of low sales, rising costs, and no replacements for those who left voluntarily.
Businesses are laying off employees because there has not been a sales rebound, even though there is some improvement in terms of COVID-19 and the market.
In addition, consumption is not a major priority for those who still have their jobs. A lot of households are selling their homes in order to raise cash.
This is because a fall in income and job instability have also prompted people to stop making real estate purchases.
Market experts said that if the property sector continues to weaken, it would have an impact on the whole economy and also affect the livelihoods of people.
The same pressure had been seen in the sector back in 2015, but household leverage had been allowed to rise for supporting the market.