China’s October retail and manufacturing data beat expectations

Covid cases have soared in China’s capital Beijing, where many communities have recently been locked down or under tighter health monitoring as the country enforces its zero-Covid policy.

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

Retail sales fell 0.5% year-on-year in October — the first drop since May — and industrial production grew 5%, the data showed.

Analysts polled by Reuters expected retail sales to slow to 1% year on year in October, and industrial production to also slow to 5.2%.

Fixed asset investment for the first 10 months of the year rose 5.8%, slightly less than expected for maintaining the same pace as September, rising 5.9% year-on-year, according to the Reuters poll.

Real estate investment continued to decline year-over-year in October, while manufacturing investment slowed somewhat from September. Investment in infrastructure picked up slightly, to 8.7% year-on-year for 2022 as of October.

The unemployment rate in the cities remained unchanged from September and stood at 5.5% in October. That of young people aged 16 to 24 also remained unchanged at 17.9%.

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The drop in retail sales in October pushed the year-to-date figure to just 0.6% growth. Appliances, catering and apparel saw some of the biggest year-on-year revenue declines last month.

Car sales held up with a growth of 3.9%. Online sales of physical goods rose 22% year over year in October and accounted for more than a quarter of total retail sales, according to CNBC calculations of the data.

China’s economic recovery has slowed, National Bureau of Statistics spokesman Fu Linghui said, noting a slowdown in global growth and domestic Covid outbreaks.

He also said that the so-called three growth pressures have intensified.

Nearly a year ago, Beijing warned that the domestic economy is facing “triple pressures”: shrinking demand, supply shocks and weakening expectations. Consumption has been one of the weakest points.

Fu noted signs of improvement in real estate, but said the sector remained on a downward trajectory.

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

It is uncertain whether the changes are enough, “but it is clear that policymakers now have the courage to take more decisive action,” Larry Hu, chief economist for China at Macquarie, said in a report.

Wide delay in October

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

Exports fell in October for the first time since May 2020, while the producer price index fell for the first time in almost two years. The core consumer price index, excluding food and energy, was unchanged from September with moderate growth of 0.6% year on year in October.

Credit data was disappointing, mainly due to the slump in the real estate market, Hu stressed. He noted that household loans for the first 10 months of the year are less than half what they were a year ago.

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