China’s industrial output rose more than estimated in July, adding to signs the economy is stabilizing after unexpectedly strong trade figures.

The National Bureau of Statistics said that factory production increased 9.7% YoY whereas retail sales advanced 13.2% while fixed asset investment excluding rural households grew 20.1% in the first seven months of the year. Steel products, nonferrous metals, power and cement showed faster output in July, while gold and jewelry sales and food and beverages supported retail gains.

The gain in factory output was the most since December excluding distortions from the Chinese New Year holiday in January and February.

The acceleration in factory output may bolster confidence that China will avoid a deeper economic slowdown after larger than forecast rebounds in exports and imports and improvement in gauges of manufacturing and service industries.

Mr Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong, said in a note “The data confirms that China has bottomed out. Output is picking up on an anticipated rebound in demand due to government stimulus and recent reductions in inventories.”

The reports show a “clear impact of the government’s pro-growth actions in July which stabilized confidence,” Lu Ting, Bank of America Corp.’s head of Greater China economics in Hong Kong, said in a note today.