China’s economy slowed in the September quarter, according to data released by China’s National Bureau of Statistics (NBS).

The economy grew 6.5% year-over-year, making for the weakest growth since the first quarter of 2009 — the depths of the financial crisis. The reading was below both the June print of 6.7% growth and the 6.6% that economists were hoping for.

China’s government is targeting growth of around 6.5% for calendar year 2018.

Over the September quarter, GDP grew by 1.6% in seasonally adjusted terms, in line with expectations but below the 1.8% pace seen in the three months to June.

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The NBS said China’s tertiary sector — dominated by services — grew by 7.7% from a year earlier, outpacing growth of 5.8% and 3.4% respectively across its secondary (industrial) and primary industries over the same period.

Like the GDP report, monthly indicators on industrial output, retail sales and urban fixed-asset investment came in mixed for September.

From a year earlier, industrial output grew by 5.8%, below the 6% level expected and 6.1% pace seen in the year to August.

It was the slowest year-ended growth since February 2016, another period when the Chinese economy was under pressure, similar to what’s been seen recently due to the impact of a mounting trade war with the United States and previous deleveraging attempts throughout its corporate sector.

Output of coal, steel and steel products grew by 5.2%, 7.5% and 9.8% respectively over the year, up from 4.2%, 2.7% and 6.4% in the 12 months to August. Cement production was steady at 5% year-on-year.

Electricity output and crude oil refining slowed, growing by 4.6% and 4.9% respectively over the year compared to 7.3% and 5.6% in August.

However, while industrial output missed, the news was better when it came to retail sales which grew by 9.2% over the year, up from 9% in the 12 months to August. Markets had been expecting sales growth to remain at 9%.

In September alone, retail turnover increased by 0.8%.

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Hinting that recent attempts by Chinese policymakers to stimulate the economy may be starting to take effect, fixed-asset investment in urban areas grew by 5.4% in the first nine months of the year compared to the same period a year earlier.

That was an acceleration on the annual increase of 5.3% seen between January to August. The pace today had been expected to remain the same.

Investment by state-owned firms, accounting for around 40% of total investment, grew by a slower 1.2% between January to September compared to a year earlier, a modest improvement on the 1.1% pace reported in August.

There was a noticeable acceleration in investment in China’s industrial sector which grew by 5.2% over the same period, stronger than the 4.3% growth reported a month earlier.

The NBS said the value of property investment grew by 9.9% year-on-year (YY) year-to-date (YTD), a deceleration on the 10.1% annual pace seen in the first eight months of the year.

The value of property sales grew by 13.3% YY YTD, down from 14.5% between January to August.

Floor space under construction increased by 3.9% YY YTD, higher than the 3.6% growth recorded in the first eight months of the year. Newly-started property investment lifted by 16.1% YY, YTD, an acceleration on the 15.9% growth reported a month earlier.

A spokesperson from the NBS said the government will keep economic growth steady despite uncertainties created by a deterioration in the external environment. They said the government will watch for any impact on employment from the escalation in trade tensions with the United States.

They said the government will be able to reach its 2018 growth target and expect infrastructure investment to stabilise.

There has been negligible market reaction to the reports with investors seemingly more interested in the performance of Chinese stocks which have rebounded strongly following an ugly plunge on Wednesday, helped by a string of headlines that suggest policymakers intend to roll-out measures to help stymie or reverse recent selling pressure.

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