BEIJING - China's industrial output growth slowed to a 17-month low in July as weakening exports hit factory production across the nation, official figures showed Thursday. The slowdown might also reflect the government's decision to reduce industrial activity in and around Beijing to try and cut air pollution for the Summer Olympics during August, according to economists. Industrial production expanded by 14.7 percent in July from the same month a year ago, down from 16.0 percent in June and 18.0 percent in July last year, the National Bureau of Statistics said. "The deceleration in export growth was the main reason for the slowdown in industrial output," the bureau said, adding export growth in July was 26.9 percent, compared with a more robust 34.2 percent in July 2007. Lower demand due to the global economic slowdown, and the strengthening of the Chinese yuan, were among key factors in causing export growth to weaken, it said. Investment bank Goldman Sachs said in a research note that factory closures for the Olympics could be a factor too, along with the government's moves in recent months to slow the flow of credit. "The deceleration in industrial production growth could be the result of Olympic-related production suspensions and restrictions amid the on-going credit tightening since last October," Goldman Sachs said in a research note. "We expect industrial production growth to be under continued pressures from these impacts, especially in the next two months." The output growth figure was last at such levels in February 2007 when it hit 12.6 percent, distorted mainly by seasonal factors due to the Lunar New Year, the biggest holiday of the year in China. Industrial output expanded 16.1 percent in the first seven months of the year from the same period in 2007, according to the figures. Economists said power bottlenecks probably hit plants and sweatshops in July. "Fairly widespread power shortages likely restricted industrial production, as evidenced by the fall in electricity production growth," said Sun Mingchun, an economist with Lehman Brothers. Power output was up just 8.1 percent July from a year earlier, the lowest level since February 2007, he said. The statistics bureau said costs were rising for local companies due to the impact of elevated commodity prices, such as for crude oil and iron ore. Inflation in China is at around 12-year highs. "Rising prices have a big impact on the profits of enterprises, and when their retained earnings decline, their ability to invest also falls," said Ren Xianfang, a Beijing-based economist with US consulting company Global Insight. Consumer price inflation was at 6.3 percent in July, while producer prices rose by 10.0 percent last month. The latter is the highest level since 1996, according to government data. The industrial output figures cap a spate of lacklustre macroeconomic figures, which included a 9.6 percent fall in the trade surplus in the first seven months of 2008. Fixed-asset investment numbers are due Friday and could provide more clues about the Chinese economic slowdown. "If fixed-asset investments are also slowing down, China's overall economy could see a big impact," said Global Insight's Ren. China's economic growth slowed to 10.4 percent in the first half of 2008 from 11.9 percent for all of 2007.