China industrial output, retail sales accelerate but property clouds outlook
Reuters
Published Nov 14, 2021 09:19PM ET
Updated Nov 15, 2021 05:01AM ET
By Kevin Yao and Gabriel Crossley
BEIJING (Reuters) -China's industrial output and retail sales grew more quickly than expected in October, despite fresh curbs to control COVID-19 outbreaks and supply shortages, but the slowing property sector weighed on the economic outlook.
Output grew 3.5% in October from the same period a year ago, official data showed on Monday, accelerating from a 3.1% increase in September. Retail sales growth also picked up.
The industrial output growth beat expectations of a 3.0% year-on-year increase in a Reuters poll of analysts, but remained the second lowest print this year.
The world's second-largest economy had staged an impressive rebound from last year's pandemic slump, but has since lost momentum as it grapples with a slowing manufacturing sector, debt problems in the property market and COVID-19 outbreaks.
"Economic momentum remained weak in October, with the real estate downturn weighing on industry," said Louis Kuijs, head of Asia economics at Oxford Economics, in a note.
The National Bureau of Statistics (NBS) data also showed retail sales accelerated even as China imposed fresh restrictions to fight a new wave of COVID-19 cases in the north.
Retail sales rose 4.9% year-on-year in October, beating expectations for 3.5% growth and after a 4.4% increase in September.
"Growth will likely weaken in the rest of this year," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
"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."
NBS data showed property investment and sales growth continued to slow over January-October compared with the first nine months, and new construction starts measured by floor area fell.
Sentiment in China's property market has been shaken by a deepening debt crisis, with property giant China Evergrande and Kaisa Group grappling with looming defaults.
POLICY MEASURES
China's sprawling manufacturing sector has slowed this year after a blistering recovery from the COVID-19 slump, with electricity shortages and production cuts hampering production in recent months.
"We expect policymakers to take more easing measures to prevent growth from falling too much," said Oxford's Kuijs, adding that weaker demand is driving the broader industry slowdown rather than just supply constraints.
Easing measures should start to have an effect early next year, he said.
Policy sources and analysts have told Reuters that China's central bank will likely move cautiously on loosening monetary policy to bolster the economy, as slowing economic growth and soaring factory inflation fuel concerns over stagflation.
Get The News You Want
Signs of stagflation are caused by short-term factors like high international commodity prices, said Fu Linghui, an NBS spokesman, at a briefing in Beijing on Monday.
Fixed asset investment continued to slow, the NBS data showed, rising 6.1% in the first 10 months from the same period a year earlier, compared with the 6.2% increase tipped by a Reuters poll and the 7.3% rise in January-September.
"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.
The more upbeat output data stood in contrast to the country's official manufacturing survey for October. China's official purchasing managers' index https://www.reuters.com/world/china/china-factory-activity-contracts-second-month-official-pmi-2021-10-31 showed factory activity declined for a second straight month in October, hurt by persistently high raw material prices and softer domestic demand.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.