BEIJING, Aug 15 Reuters China39;s factory output growth slowed and missed expectations in July, adding to a series of indicators that show the world39;s secondlargest economy is struggling to kick into a higher gear, even with recent government support.

Industrial output grew 5.1 from a year earlier, National Bureau of Statistics NBS data showed, slowing from the 5.3 pace in June and below expectations for a 5.2 increase in a Reuters poll of analysts.

In an upbeat contrast, the NBS39; monthly activity indicators showed retail sales, a gauge of consumption, rose 2.7 in July, quickening from a 2.0 increase in June and beating expectations for growth of 2.6, a sign efforts to boost household spending were getting some traction.

However, analysts warn the broader outlook is still highly challenging for policymakers, suggesting more stimulus measures will be needed.

The data shows that the economy has gotten off to a weak start in the second half of the year, and it is expected that the probability of replacing MLF with a RRR cut will increase, but key to maintaining 5 economic growth remains the arrival of fiscal spending, said ANZ China market economist Xing Zhaopeng. He was referring to the People39;s Bank of China39;s mediumterm lending facility and reserve requirement ratio.

On Thursday, the central bank injected cash through a shortterm bond instrument and said it would conduct an MLF rollover later this month as it extends liquidity support to the financial…