Chinese Steel Factory
Laborers work at a steel factory in Dalian, Liaoning province, July 13, 2012. Reuters/China Daily

China's report Friday that its economic activity grew in the second quarter much as expected reinforced expectations that the growth rate in the world's second-biggest economy will increase later this year.

The 7.6 percent growth from April through June, though down from 8.1 percent in the first quarter, was in the range of analysts' expectations. and reinforced an expectation that the growth rate in economic activity will increase around the second half of this year.

There were however a number of signs in today's data releases that economicconditions are starting to thaw, Mark Williams, a Capital Economics analyst, said in a note.

China's central bank said second-quarter retail sales were better than expected in June, up 13.7 percent, beating Capital Economics' expectations for a 13.4 percent increase. Sales growth rose over May's level, and a 20.4 percent increase in fixed investment spending also beat expectations, which were for 20 percent.

Output of cement, a useful coincident indicator for building activity, accelerated for the second month, Williams said. He also said that China's report shows last month's furniture sales were more than a quarter higher than the same period last year.

The pace of GDP growth picked up slightly in quarter over quarter terms, to 1.8 percent compared with 1.6 percent in Q1 (the latter has been revised down since thefirst release), Williams said. We also find that growth has stopped slowing.

Despite being the biggest decline in the nation's economic growth since 2009, other analysts also saw a proverbial silver lining.

(The report) supports our view that economic activity will bottom-out over the summer months followed by a moderate recovery thereafter when the bulk of the step-up in macro accommodation is felt, Nikolaus Keis, an economist at UniCredit Research, told Reuters. But, in order to safeguard a soft landing and further reduce downside risk, the Chinese authorities will have to intensify their policy accommodation.

The central bank also said that a stress test conducted late last year showed the country's top banking institutions were positioned to withstand a slowdown.