Seeing downside surprises in the Chinese economic data is gradually becoming a habit. The growth rate of industrial output slowed to a 17-year low in May while decline in investment in fixed assets suggests that a quick recovery in production can’t be expected in the near-term.

The output of industrial factories grew only 5% in May YoY, substantially lower than the forecast of 5.5%. In April, this figure was 5.4%. It is also worth noting that the growth rate went down to the lowest level since 2002, showing how fragile industrial expansion is in China.

Investment in fixed assets grew at a slower pace than expected, reinforcing expectations that Beijing will again deploy larger-scale measures to support the economy.

Liu He’s comments on Thursday fueled expectations that the government will increase fiscal and monetary stimulus in response to increased trade tensions. The official allowed more active interventions of the PBOC, and also assured the authorities have sufficient means and will to counter foreign challenges.

However, despite the heaps of measures taken, the main indicators of the state of Chinese economy indicate an overwhelming slowdown in economic activity. The fears grow in the corporate environment that the trade dispute is adopting features of a long-term fight. Then the negative effects also seep into consumer confidence through stagnation of wages, increase in the number of layoffs, etc.

The data on Friday confirmed the assumption that domestic consumer demand continues to weaken, which was also indicated by data on imports and the volume of new loans that were released earlier this week.

Investments in capital assets grew by only 5.6% in the January-May period in annual terms, against 6.1% in the previous period. Private investments in fixed assets, which accounted for about 60% of all investments in China, also slowed to 5.3% versus 5.5.% in the previous period. Infrastructure spending, one of the indicators of the activity of fiscal intervention in the economy slowed down from 4.4% to 4.0% in May in annual terms. This indicator is under close attention of investors, since a large number of steel and cement enterprises are “thriving” thanks to the government spending.

Investments in housing, a crucial driver of economic growth, slowed down to 11.2% in the first five months. In the past period this indicator was 11.9%.

In retail sales there was a turning point, the growth rate in May increased from 7.2% in April to 8.6% in May due to tax cuts and other stimulus measures. However, part of the strengthening of sales probably fell on inflation growth, since the indicator is calculated in nominal terms. Earlier this week, the automakers association in China reported the worst sales month in history, as consumer confidence went down the drain and some provinces tightened their standards for emissions of gases into the atmosphere, effectively banning sales of some low-cost cars.