China’s industrial output grew at faster pace in October, retail sale growth accelerated, while investment slowed further

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China’s industrial output grew 3.5% in October from the same period a year ago, data released by the National Bureau of Statistics (NBS) showed on Monday. That accelerated from a 3.1% increase in September and beating expectations of a 3% increase in a Reuters poll, but remained the second lowest print this year.

China’s industrial output grew 3.5% in October from a year earlier, accelerating from the 3.1% growth in September, said the NBS.

October’s industrial output rose 10.6% from the same period in 2019, leaving two year growth at 5.2%, said the NBS.

In terms of sectors, the value added by the mining grew by 6% year on year, while manufacturing rose by 2.5%, and the output of electricity, heat power, gas and water rose by 11.1%, showed the data.

Output of the hi-tech manufacturing sector rose by 14.7% year on year, accelerating by 0.7 percentage point from September.

In terms of products, the output of new energy vehicles, integrated circuits and industrial robots rose by 127.9%, 22.2% and 10.6%, respectively, in October from a year ago, bringing the growth for the first ten months to 164%, 40.2% and 51.9%, according to the data.

Retail sales, a key measurement of consumer spending in the world’s most populous country, grew by 4.9% in October from a year earlier, quickening from the 4.4% growth in September, and above the expectation for a rise of 3.8% in Bloomberg survey. Retail sales last month grew 9.4% from the same period in 2019, leaving the two-year growth rate at 4.6%.

In breakdown, retail sales of physical goods increased 5.2% year over year in October, while catering retail sales rose 2%, showed the data.

China’s retail sales grew by 4.9% year over year in October, pricking up from the 4.4% growth in September, said the NBS.
China’s retail sales of physical goods rose 5.2% in October from a year earlier and retail sales in catering sector rose 2%, said the NBS.

For the first ten months, China’s total retail sales grew 14.9% year over year to 35.85 trillion yuan, rising by 14.9% from a year earlier and up 8.1% from the same period in 2019, showed the data.

Online retail sales increased 17.4% in Jan – Oct from a year earlier to 10.38 trillion yuan, with online retail sales of physical goods up 14.6% to 8.5 trillion yuan and accounting for 23.7% of the total retail sales, said the NBS.

Fixed asset investment slowed further however, rising 6.1% in the first 10 months from the same period a year earlier, compared with the 6.2% increase expected by analysts at a Reuters poll and compared to the 7.3% rise in January-September, slowing for the eighth consecutive month.

Manufacturing investment, real estate investment and infrastructure investment all slowed during the period to 14.2%, 7.2% and 1%, respectively, from 14.8%, 8.8% and 1.5% from the first nine months, showed the data.

China’s fixed-asset investment grew 6.1% in Jan – Oct from a year earlier, slowing from 7.3% growth in the first nine months, said the NBS.

Leading indicators for the real estate sector all slowed last month, with land purchases, new construction starts sliding 11% and 7.7% in the period of Jan – Oct from year earlier, faster than the drops of 13.4% and 11% in the first nine months. Funds raised by property developers grew by 8.8% during the period, slowing by 2.3 percentage points from Jan – Sept, showed NBS data.

China’s economy had staged an impressive recovery from the impact of the coronavirus, but faced with numerous headwinds, including a property slump, energy crisis, weak consumer sentiment and soaring raw material costs, its economic growth slowed to 4.9% in the third quarter.

“Growth will likely weaken in the rest of this year,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management in note.

“The COVID outbreak has forced more cities to tighten travel restrictions, which will likely affect the service sector adversely in November. The property sector slowdown is getting worse,” Zhang said, adding this was “the key risk for the macro outlook in the next few quarters.”

“We think macro policies are close to a turning point. We expect the government will boost fiscal spending around year end to stabilize the weakening trend in investment,” said Zhang.