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InvestmentsChina industrial output, retail sales accelerate but property clouds outlook By Reuters

China industrial output, retail sales accelerate but property clouds outlook By Reuters


© Reuters. FILE PHOTO: An worker inspects a circuit board on the controller manufacturing line at a Gree manufacturing facility, following the coronavirus illness (COVID-19) outbreak in Wuhan, Hubei province, China August 16, 2021. China Daily through REUTERS

By Kevin Yao and Gabriel Crossley

BEIJING (Reuters) -China’s industrial output and retail sales grew extra rapidly than anticipated in October, regardless of contemporary curbs to manage COVID-19 outbreaks and provide shortages, but the slowing property sector weighed on the financial outlook.

Output grew 3.5% in October from the identical interval a 12 months in the past, official information confirmed on Monday, accelerating from a 3.1% enhance in September. Retail sales development additionally picked up.

The industrial output development beat expectations of a 3.0% year-on-year enhance in a Reuters ballot of analysts, but remained the second lowest print this 12 months.

The world’s second-largest economic system had staged a powerful rebound from final 12 months’s pandemic stoop, but has since misplaced momentum because it grapples with a slowing manufacturing sector, debt issues within the property market and COVID-19 outbreaks.

“Economic momentum remained weak in October, with the real estate downturn weighing on industry,” mentioned Louis Kuijs, head of Asia economics at Oxford Economics, in a notice.

The National Bureau of Statistics (NBS) information additionally confirmed retail sales accelerated whilst China imposed contemporary restrictions to struggle a brand new wave of COVID-19 circumstances within the north.

Retail sales rose 4.9% year-on-year in October, beating expectations for 3.5% development and after a 4.4% enhance in September.

“Growth will likely weaken in the rest of this year,” mentioned 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 mentioned, including this was “the key risk for the macro outlook in the next few quarters.”

NBS information confirmed property funding and sales development continued to sluggish over January-October in contrast with the primary 9 months, and new building begins measured by ground space fell.

Sentiment in China’s property market has been shaken by a deepening debt disaster, with property large China Evergrande and Kaisa Group grappling with looming defaults.

POLICY MEASURES

China’s sprawling manufacturing sector has slowed this 12 months after a blistering restoration from the COVID-19 stoop, with electrical energy shortages and manufacturing cuts hampering manufacturing in latest months.

“We expect policymakers to take more easing measures to prevent growth from falling too much,” mentioned Oxford’s Kuijs, including that weaker demand is driving the broader business slowdown quite than simply provide constraints.

Easing measures ought to begin to have an impact early subsequent 12 months, he mentioned.

Policy sources and analysts have advised Reuters that China’s central financial institution will seemingly transfer cautiously on loosening financial coverage to bolster the economic system, as slowing financial development and hovering manufacturing facility inflation gas issues over stagflation.

Signs of stagflation are brought on by short-term components like excessive worldwide commodity costs, mentioned Fu Linghui, an NBS spokesman, at a briefing in Beijing on Monday.

Fixed asset funding continued to sluggish, the NBS information confirmed, rising 6.1% within the first 10 months from the identical interval a 12 months earlier, in contrast with the 6.2% enhance tipped by a Reuters ballot 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,” mentioned Zhang.

The extra upbeat output information stood in distinction to the nation’s official manufacturing survey for October. China’s official buying managers’ index https://www.reuters.com/world/china/china-factory-activity-contracts-second-month-official-pmi-2021-10-31 confirmed manufacturing facility exercise declined for a second straight month in October, harm by persistently excessive uncooked materials costs and softer home demand.

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