China’s retail sales rose by 10.1% in November, year-on-year, up from the 7.6% growth in October, but below the 12.6% growth forecast by Chinese financial data provider Wind. Analysts at Capital Economics said consumption “held up well”, though they pointed to the low base of comparison from last year as cities in China were under stringent lockdowns and retail sales fell by 5.9%, year-on-year in November 2022. “While retail sales have shown strong year-on-year growth, this increase is primarily due to a low-base effect,” said Yue Su, Principal Economist for China at The Economist Intelligence Unit (EIU). “When considering month-on-month growth, after eliminating seasonal factors, there has been a mild contraction.”
Property investment in China fell by 9.4% in the first 11 months of 2023 compared with a year earlier, with analysts at Capital Economics saying “property investment eased slightly”. “While markets may have become somewhat desensitized by constant discussions related to the property sector, it remains the single largest drag affecting China’s economy, especially as cash-strapped and insolvent developers have left a vast number of homes unfinished,” said analysts at Nomura.
Fixed-asset investments (FAI) in China expanded by 2.9% in the first 11 months, year-on-year, unchanged from the growth seen in the January-October period, though analysts at Nomura said the reading again missed market expectations mainly due to a low base. The reading was partly lifted by Beijing’s decision in October to sell CNY1 trillion worth of sovereign bonds, and also front-load the local government bond quota, to stabilize economic momentum.
Analysts at Capital Economics said the year-to-date growth holding steady in the first 11 months of the year implied an acceleration in monthly year-on-year growth from 1.4% to 2.9%, with growth also picking up in seasonally adjusted terms. Private investment, meanwhile, declined by 0.5% in the first 11 months of the year, compared with a year earlier.
China’s industrial output rose by 6.6% in November, compared with 4.6% growth in October, and analysts at Capital Economics said this was the “main bright spot” in November’s data release, thanks to the strength in exports. “Much of the strength in November came from industrial production. Growth beat expectations,” they said. After adjusting for seasonality, output in November expanded at the fastest clip in 18 months. “This partly reflects the recent strength of exports, which reached a new high in volume terms last month,” they said. China’s urban surveyed unemployment rate stood at 5% in November, year-on-year, well below the 5.6% it averaged last year.
Analysts at Capital Economics said the latest data suggested that “the recovery continued to make headway” in November. The property market remains the single-largest drag affecting China’s economy, according to analysts at Nomura, who said it may contribute to another economic dip in the first half of 2024, the South China Morning Post reports.
