Analysts at Standard Chartered note that China’s growth slowed across the board in August, failing market expectations of recovery after a disappointing July.

• “Industrial production (IP) growth decelerated further to 4.4% y/y in August, averaging only 4.6% in the first two months of Q3, down from 5.6% in Q2.
• Fixed asset investment (FAI) growth slowed to 3.3% y/y in real terms in August, from 3.9% in July and 3.8% in Q2, due to falling manufacturing investment (down 1.6% y/y in August in nominal terms versus 4.7% growth in July).
• PPI deflation deepened to 0.8% y/y in August. Falling PPI has seen industrial profits decline 1.7% y/y from January-July, compared to a 17% increase during the same period last year.
• We expect China’s GDP growth to moderate to 6.1% y/y in Q3, from 6.4% in Q1 and 6.2% in Q2.
• We maintain our forecast that the People’s Bank of China (PBoC) will cut the required reserve ratio (RRR) by another 50bps or inject liquidity via the medium-term lending facility (MLF) before end-2019. We also expect the PBoC to cut the MLF rate twice by 10bps each in the rest of 2019, with the first cut as early as September and again in Q4.”