(Yicai) Aug. 15 -- Several of China’s key economic indicators slipped last month due to the difficult external environment and adverse weather at home, with the authorities and analysts saying the economy is stable overall.

Industrial production rose 5.7 percent in July from a year ago, slowing from June’s 6.8 percent, while retail sales of consumer goods rose 3.7 percent, compared with 4.8 percent in the prior month, data released by the National Bureau of Statistics showed today. From January to July, fixed asset investment rose 1.6 percent, down from 2.8 percent in January to June.

The international environment was complex and severe in July, and some parts of China experienced extremely high temperatures, heavy rainfalls, and flooding, which had a short-term impact on the economy, NBS spokesperson Fu Linghui said.

Further efforts will be made to maintain the continuity and stability of policies, and to enhance their flexibility and foresight, Fu said, with a focus on stabilizing employment and markets, supporting businesses, and managing expectations.

Increased volatility in the external trade environment could lead to a decline in industrial exports this year, Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, told Yicai. 

Additionally, intensified government efforts to address malicious market competition could actually slow production growth in certain industries, Wang warned. But starting from this month, stronger policies to boost consumption and expand demand should provide solid support for production in related industries, he added.

Industrial output will be supported by existing and new policies, according to Wu Chaoming, chief economist at Hunan Chasing Financial Holdings, though pressure from slowing domestic and external demand is expected to intensify in this half of the year.

Although consumer goods sales slowed in July, Fu said that if goods and services are combined, preliminary estimates show year-on-year growth of around 5 percent from January to July. This indicates that consumption has generally seen a steady upward trend this year, and that the growth momentum has not been affected, he added.

Fu pointed out that external instability and uncertainties are increasing, and household consumption capacity and confidence still need bolstering. In the next stage, efforts should focus on expanding goods consumption while fostering new growth points in services.

Fu also said the slowdown in investment growth can be attributed to several reasons, including short-term factors such as extreme weather, which has affected project construction. There has also been intensified competition among domestic firms and a decline in investment returns, he said.

Overall investment in ongoing projects remains healthy, Fu noted, and the size of investment continues to expand. From the perspective of future development, China's per-capita capital stock still lags significantly behind that of developed countries, Fu added, indicating that there is still immense potential for investment. 

Editor: Tom Litting