Mixed news from our biggest export markets shows more signs the rebound in the Japanese economy is running out of steam, but the early flow of monthly figures from China suggest the rebound there remains on track.

An update on Japan’s second quarter growth has chopped the first estimate from an annual 3.7% rate (or 0.9% month on month) to 2.3% (or around 0.5% month-on-month).

The economy has seen growth: the first quarter saw a fall of 12.4% (annualised) or just over 3% quarter on quarter, but industrial production, inflation, retail sales, exports and several other leading indicators have been released since the end of June and suggest that this slowdown is continuing. So noticeable is the slide that some Japanese economists are now warning of a double dip recession, with a slide into negative territory in the 4th quarter.

Business investment turned down in the June quarter by more than originally forecast (over 22%) and that’s a bad sign for future demand and this week figures showed a slump in machinery orders, another key indicator of future activity in Japan.

Wholesale price inflation continues to be sharply negative, down an annual 8.5% in August, which matches the size of the annual fall for July. Seeing consumer price inflation fell 2.2% and core inflation was down 0.9%, a lot of pain is being inflicted on Japanese companies by the combination of falling import prices (iron ore, coal and oil) and the rising yen (which is imposing even greater price declines for both imports and exports).

The latest growth estimate from the Cabinet Office was sharply lower than the 3.7% annual forecast from the market.

But the news from China in the early August figures was different with car sales higher, house prices up in 70 major cities and crude steel production hitting a record 51.65 million tonnes.

More figures are due out later today on exports, inflation, retail sales and perhaps production.

Figures from the China Iron and Steel Association (CISA) showed the daily output in august was 1.67 million tonnes, up from 1.64 million tonnes in July.

However, industry observers in Beijing say a fall will happen this month because of falling prices due to an increase in stocks of steel products.

The 2% rise in August in home prices was up 0.9% from July when they rose 1.0%. Prices in medium cities rose 2% in August.

New house prices rose 1.1% from July and were up 1.5% from August 2008, indicator the continued sluggishness of the sector.

Prices of existing houses rose a faster 3.6% from August a year ago and 0.6% from July.

And sales of domestically made cars jumped to 1.14 million units in August to exceed 1.1 million units for the sixth consecutive month. August is usually a flat month for sales (and other activity because it comes in the middle of summer — a year ago it also featured the Olympics).

According to figures from the China Association of Automobile Manufacturers, August’s figure pushed the country’s auto sales in the first eight months past 8.33 million units, up nearly 30% from a year ago. The country also produced 8.25 million autos in the same period, up 26.55% year-on-year.

August’s sales were up 81% from August 2008. The Games last year depressed a lot of activity in the country, especially around Beijing.