China’s October retail and industrial data falls short of expectations

Covid cases have skyrocketed in the Chinese capital Beijing, where many communities have recently been placed under lockdown or under stricter health monitoring as the country maintains a Covid-free policy.

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BEIJING – Three indicators of China’s economy in October fell short of expectations and marked a slowdown from September, according to data released by China’s National Bureau of Statistics on Tuesday.

The data showed retail sales fell 0.5% in October from a year ago — the first decline since May — and industrial production rose 5%.

Analysts polled by Reuters expect retail sales to slow to 1 percent year-on-year growth in October and industrial production to slow to 5.2 percent.

Fixed-asset investment in the first 10 months of the year rose 5.8 percent, well below expectations of maintaining a September pace, with a 5.9 percent increase year-on-year, according to a Reuters poll.

Investment in real estate continued to decline in October year-on-year, while investment in the manufacturing sector slowed slightly compared to September. Investment in infrastructure increased slightly, to 8, 7% year-over-year for 2022 through October.

The unemployment rate in cities was unchanged from September, at 5.5% in October. The proportion of youth aged 16 to 24 was also unchanged, at 17.9%.

Investors are looking for signs of reopening in China

The October retail sales slump has dragged year-to-date growth to just 0.6 percent. Appliances, dining and apparel saw some of the steepest sales declines last month from a year ago.

Auto sales held steady with growth of 3.9%. According to CNBC calculations of the data, online merchandise sales grew 22% year over year, accounting for more than a quarter of total retail sales.

Fu Linghui, a spokesman for the National Bureau of Statistics, said China’s economic recovery has slowed, pointing to a slowdown in global growth and the outbreak of Covid-19 in the country.

He also thinks that the so-called three pressures for growth are increasing.

Almost a year ago, Beijing warned the domestic economy faces “three pressures” – from falling demand, a supply shock and weakening expectations. Consumption is one of the weakest points.

Fu noted signs of improvement in the property sector, but said the sector was still on a downward trajectory.

Over the past few days, authorities have announced measures to support the struggling real estate market, according to financial media and official announcements.

Larry Hu, chief China economist at Macquarie, said in a note: “It’s unclear whether these changes will be enough, but it’s clear that policymakers now have the guts to make them. more assertive actions”.

Widespread recession in October

Data released ahead of Tuesday’s announcement showed a negative change in trade and domestic demand last month.

export decrease in October for the first time since May 2020while The producer price index fell for the first time in nearly two years. The core consumer price index, which excludes food and energy, was unchanged from September with 0.6% year-on-year growth in October.

Hu pointed out that the credit data was disappointing, mainly due to the slump in the property market. He noted that household loans in the first 10 months of the year were less than half what they were a year ago.

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