By Kevin Yao and Ellen Zhang

BEIJING (Reuters) -A broad array of Chinese data on Tuesday highlighted intensifying pressure on the economy from multiple fronts, prompting Beijing to cut key policy rates to shore up activity but analysts say more support is needed to revitalise growth.

Just before the release of a batch of July data, China’s central bank unexpectedly chopped one set of key interest rates, and followed it with cuts on other rates hours later, underlining the rapid loss of the post-COVID economic rebound that has shaken global financial markets.

Tuesday’s data released by the National Bureau of Statistics (NBS), which comes on top of a raft of weak indicators from last week, showed retail sales, industrial output and investment all growing at a slower than expected pace – indicating the engines of business and consumption in the world’s second-biggest economy were severely underpowered.

Additionally, China suspended publishing youth jobless data, which hit a record high of 21.3% in June.

“All the main activity indicators undershot consensus expectations in July, with most either stagnant or barely expanding in month on month terms,” said Julian Evans-Pritchard, economist at Capital Economics.

“And with financial troubles at developers such as Country Garden likely to weigh on the housing market in the near-term, there is a real risk of the economy slipping into a recession unless policy support is ramped up soon.”

Nomura analysts were equally downbeat on China’s economic outlook.

“We believe the Chinese economy is faced with an imminent downward spiral with the worst yet to come, and the rate cut this morning will be of limited help,” they said.

Most economists see downside risk to Chinese growth but they do not expect a recession.

Industrial output grew 3.7% from a year earlier, slowing from the 4.4% pace seen in June, the NBS data showed, and was below expectations for a 4.4% increase in a Reuters poll of analysts.

Retail sales, a gauge of consumption, rose 2.5%, down from a 3.1% increase in June and missed analysts’ forecasts of 4.5% growth despite the summer travel season.

It was the slowest growth since December 2022, showing how much of a challenge authorities face as they try to make consumption the key driver of future economic growth.

MORE STIMULUS

Asian stocks stalled at one-month lows, the yuan hit a 9-month nadir while the dollar held broadly firm after the weak Chinese data and latest policy easing measures.

Following the first rate cuts, China’s major state-owned banks were seen selling U.S. dollars and buying yuan in a bid to stem rapid declines in the currency, three people with direct knowledge of the matter said. Sovereign bond yields fell to three-year lows, and benchmark stock indexes were down.

Record-low credit growth and rising deflation risks in July necessitated more monetary easing measures to arrest the slowdown, market watchers said, while default risks at some housing developers and missed payments by a private wealth manager also soured market confidence.

Nie Wen, an economist at Hwabao Trust, expects special bonds to be introduced urgently and said the probability of a reserve requirement ratio (RRR) cut in the short run is relatively large.

Policymakers last month released a batch of stimulus measures, from boosting auto and home appliances consumption, relaxing some property restrictions to pledging support to the private sector, as a post-COVID rebound rapidly lost steam since the second quarter.

The catering sector, which reaped benefits from the COVID reopening, saw slower revenue growth in July from June. Investment in the private sector shrank 0.5% in the first seven months, extending 0.2% decline in the first half of 2023.

STRUCTURAL PAINS

The persistent drag in the property sector, mounting local government debt pressure, high youth jobless rate and cooling foreign demand continue to be major impediments to fostering a sustainable economic revival.

China is undergoing a painful transition to a less debt-fuelled, less property-centric and more consumer-driven economy, said Robert Carnell, Asia-Pacific head of research at ING.

“We will continue to see weak macro data for the foreseeable future. It is a necessary part of the adjustment and is far preferable to resurrecting the debt-fuelled property model that propelled growth previously. But we do need to lower our expectations for China’s growth.”

Other data on Tuesday showed fixed asset investment expanded 3.4% in the first seven months of 2023 from the same period a year earlier, versus expectations for a 3.8% rise. It grew 3.8% in the January-June period.

Investment in the property sector tumbled 8.5% year-on-year in January-July, after shrinking 7.9% in January-June, extending its fall for the 17th consecutive month.

The nationwide survey-based jobless rate climbed slightly to 5.3% from 5.2% in June. Among OECD members, the average unemployment rate was 4.8%, with youth joblessness around 10%.

China set its 2023 growth target at around 5%, but Nomura analysts warn the country could miss the goal again as it did last year.

“We also see bigger downside risk to our 4.9% y-o-y growth forecast for both Q3 and Q4, and it is increasingly possible that annual GDP growth this year will miss the 5.0% mark.”

($1 = 7.2838 Chinese yuan renminbi)

(Additional reporting by Liangping Gao and Albee Zhang; Editing by Shri Navaratnam and Ed Osmond)

By James Davey

LONDON (Reuters) -British grocery inflation eased for a fifth straight month in August while wet weather dented sales growth, industry data showed on Tuesday.

Market researcher Kantar said annual grocery inflation was 12.7% in the four weeks to August 6 versus 14.9% in its July data set.

It said the outcome was the second sharpest monthly fall since it started monitoring grocery inflation in its current way in 2008.

“Prices are still up year on year across every supermarket shelf, but consumers will have been relieved to see the cost of some staple goods starting to edge down compared with earlier in 2023,” Fraser McKevitt, head of retail and consumer insight at Kantar, said, pointing to price falls in milk and sunflower oil.

Kantar noted prices are rising fastest in foods such as eggs, frozen potato products and sugar confectionery.

The Conservative government’s key economic pledge to halve inflation in 2023 ahead of a probable election in 2024 has been challenged by stubbornly high food inflation.

Its recent downward trajectory is being closely watched by consumers, the Bank of England (BoE) and lawmakers.

In June, Tesco, Britain’s biggest retailer, said food inflation had peaked and all of the country’s major grocers have cut the prices of some products over the last month.

Supermarket chains have had to defend themselves against claims they have profiteered from a cost of living crisis.

The Kantar data going into August provides the most up to date snapshot of UK grocery inflation.

Official data published last month showed overall inflation in June was 7.9%, the highest of any major economy, with food inflation at 17.3%. Official data for July is published on Wednesday.

The BoE has forecast that food price inflation will fall to around 10% later this year.

Kantar said grocery sales increased 6.5% year-on-year over the four week period on a value basis, down from growth of 10.4% in its July report, as unseasonable weather put the dampeners on sales of usual summer favourites, such as ice cream, soft drinks and barbecue products.

Discounters Aldi and Lidl were again the fastest growing grocers over the 12 weeks to August 6, with sales up 21.2% and 19.8% respectively.

UK supermarkets’ market share and sales growth (%)

Market share Market share % change in

12 wks to 12 wks to sales

Aug 6 2023 Aug 7 2022 (yr-on-yr)

Tesco 27.0 26.9 9.5

Sainsbury’s 14.8 14.8 9.3

Asda 13.7 13.9 7.7

Aldi 10.2 9.1 21.2

Morrisons 8.7 9.3 2.3

Lidl 7.7 7.0 19.8

Co-operative 6.1 6.5 3.4

Waitrose 4.4 4.6 4.4

Iceland 2.3 2.3 6.7

Ocado 1.7 1.8 1.4

Source: Kantar

(Reporting by James Davey; Editing by Conor Humphries)

By Laurie Chen and Albee Zhang

(Reuters) -China suspended publication of its youth jobless data on Tuesday, saying it needed to review the methodology behind the closely watched benchmark, which has hit record highs in one of many warning signs for the world’s second-largest economy.

The decision announced shortly after the release of weaker-than-expected factory and retail sales data sparked rare backlash on social media amid growing frustration about employment prospects in the country.

It also marks the latest move by Chinese authorities to restrict access to key data and information, a trend that is unnerving overseas investors.

Fu Linghui, a spokesman for the National Bureau of Statistics (NBS), said the release of data would be suspended while authorities look to “optimise” collection methods.

“In recent years, the number of university students has continued to expand,” Fu said. “The main responsibility of current students is studying. Society has different views on whether students looking for jobs before graduation should be included in labour force surveys and statistics.”

This issue, as well as the definition of the age range currently set at 16-24, “needs further research,” Fu said.

In recent months, China has restricted foreign users’ access to some corporate registries and academic journals, and cracked down on due diligence firms operating in the country, a vital source of information on China for overseas businesses.

“The declining availability of macro data may further weaken global investors’ confidence in China,” said Ting Lu, chief China economist at Nomura, adding that youth unemployment was expected to have risen in July.

At the height of its COVID-19 outbreak late last year, China abruptly changed the way it classified deaths from the disease, a move that fueled criticism abroad and at home.

Tuesday’s move has also been met with scepticism at home as young Chinese face their toughest summer job-hunting season.

The most recent NBS data on youth unemployment, published last month, showed the jobless rate jumping to a record high of 21.3% in June.

Some 47% of graduates returned home within six months of graduation in 2022, up from 43% in 2018, state-run China News Service reported last week, citing a private-sector survey.

“If you close your eyes then it doesn’t exist,” one user wrote on microblogging site Weibo, where a hashtag related to NBS’ decision received over 10 million views.

“There is a saying called ‘burying your head in the sand’,” wrote another user.

(Reporting by Laurie Chen and Albee Zhang; Editing by Muralikumar Anantharaman, Sam Holmes and Gerry Doyle)

By Luc Cohen

NEW YORK (Reuters) -Sam Bankman-Fried used money he stole from customers of his FTX cryptocurrency exchange to make more than $100 million in political campaign contributions before the 2022 U.S. midterm elections, federal prosecutors said on Monday.

An amended indictment accused the 31-year-old former billionaire of directing two FTX executives to evade contribution limits by donating to Democrats and Republicans, and to conceal where the money came from.

“He leveraged this influence, in turn, to lobby Congress and regulatory agencies to support legislation and regulation he believed would make it easier for FTX to continue to accept customer deposits and grow,” the indictment said.

Bankman-Fried faces seven counts of conspiracy and fraud over FTX’s collapse, though the indictment no longer includes conspiracy to violate campaign finance laws as a separate count.

Federal prosecutors in Manhattan said last month they would drop that charge after the Bahamas, where FTX was based and where Bankman-Fried was arrested in December 2022, said it never intended to extradite him on that count. 

Instead, prosecutors told U.S. District Judge Lewis Kaplan last week that a new indictment would “make clear that Mr. Bankman-Fried remains charged with conducting an illegal campaign finance scheme as part of the fraud and money laundering schemes originally charged.”

Mark Botnick, a spokesman for Bankman-Fried, declined to comment. 

Bankman-Fried has previously pleaded not guilty to stealing billions of dollars in FTX customer funds to plug losses at Alameda Research, his crypto-focused hedge fund.

Kaplan jailed him last Friday ahead of his Oct. 2 trial, after finding probable cause that Bankman-Fried tampered with witnesses.

Previously, Bankmman-Fried had been largely confined to his parents’ Palo Alto, California, home on $250 million bond.

Bankman-Fried rode a boom in cryptocurrency values to amass a fortune that was once estimated at $26 billion, and became an influential donor to mostly Democratic candidates and causes.

The November 2022 collapse of FTX after a flurry of customer withdrawals destroyed his wealth and stained his reputation.

EX-FTX EXEC SALAME DECLINES TO TESTIFY

Bankman-Fried’s indictment does not name the two people prosecutors say he used for “straw donors” to donate money at his direction. But other court papers and Federal Elections Commission data show they are Nishad Singh and Ryan Salame.

  Singh, FTX’s former engineering chief, pleaded guilty to fraud and campaign finance violations in February. He donated $9.7 million to Democratic candidates and causes, and said in court he knew the money came from FTX customers.

Salame, the former co-CEO of FTX’s Bahamian unit, gave more than $24 million to Republican candidates and causes in the 2022 election cycle, according to Federal Election Commision data.

He has not been charged with a crime. In a separate court filing on Monday, prosecutors said Salame’s lawyer had told them he would invoke his Fifth Amendment right against self-incrimination if called to testify.

Prosecutors said Salame told a family member in a November 2021 message that Bankman-Fried wanted to use political donations to “weed-out” anti-crypto Democratic and Republican lawmakers, and would likely “route money through me to weed out that republican [sic] side.”

Salame’s lawyer did not immediately respond to a request for comment.

(Reporting by Luc Cohen in San Jose, CaliforniaEditing by Chris Reese, David Gregorio, Jonathan Oatis and Shri Navaratnam)

By Tetsushi Kajimoto and Kantaro Komiya

TOKYO (Reuters) -Japan’s economy grew much faster than expected in April-June, as brisk auto exports and tourist arrivals helped offset the drag from a slowing post-COVID consumer recovery, although global recession prospects cloud the outlook.

The 6.0% annualised growth in Japan’s economy translated into a quarterly gain of 1.5%, much bigger than median estimates of 0.8% in a Reuters poll and bringing gross domestic product (GDP) to a record high.

It was the fastest expansion since the final quarter of 2020 and followed a revised 3.7% expansion in January-March.

While the headline GDP data provides some relief to policymakers seeking to balance economic growth with sustainable inflation, it masks underlying weakness in the household sector.

Marcel Thieliant, head of Asia-Pacific at Capital Economics, said the export-driven momentum in growth is unlikely to be sustained.

“And while capital goods exports bounced back in June as the largest falls in overseas investment are now behind us, we do not expect a vigorous recovery,” Thieliant said.

Private consumption, which makes up more than half of the economy, fell 0.5% quarter-on-quarter in the April-June period, as price hikes hit sales of food and household appliances.

Exports expanded 3.2% in the second quarter led by car exports and inbound tourism, while capital expenditure was flat.

Japanese automakers have benefited from a weaker yen, which has helped prop up profits amid declining sales in China and an increasingly tough shift to electric vehicles.

Strong U.S. and European demand has also supported exports while the post-COVID boom in foreign tourists has given the economy a much-needed tailwind.

That boost in external demand, or net exports, added 1.8 percentage points to second quarter growth. However, that net contribution was also flattered by a decline in imports for a third straight quarter, which have struggled due to yen weakness.

Meanwhile, domestic demand shaved 0.3 of a percentage point off growth.

“The biggest factor was a decline in imports that pushed up GDP. It doesn’t mean a strong recovery in Japanese economy,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.

“As such, the central bank will maintain the current monetary policy and adopt wait-and-see stance for the time being.”

Real wages turned positive for the first time in seven quarters and corporate appetite for investment was solid, Economy Minister Shigeyuki Goto said.

“Against this backdrop, we expect moderate economic recovery to continue although caution is needed on downside risks from global economy and effects of price hikes,” Goto said.

The Bank of Japan took steps last month to allow long-term interest rates to rise more, a move seen by analysts as the beginning of a gradual shift away from massive monetary stimulus.

(Reporting by Tetsushi Kajimoto and Kantaro Komiya; Graphics by Pasit Kongkunakornkul. Editing by Sam Holmes)