China Industrial Production, Retail Sales Growth Accelerates

China’s industrial production grew at a faster rate as the shortage in electricity eased in October and retail sales growth accelerated despite the rising number of Covid cases. However, property investment growth weakened raising concern about construction activity going forward.

Industrial production grew at a pace of 3.5 percent after rising 3.1 percent in September, the National Bureau of Statistics said. Economists had forecast annual increase of 3.0 percent.

Likewise, annual growth in retail sales improved to 4.9 percent in October from 4.4 percent in September. Sales were expected to climb at a slower pace of 3.5 percent.

Industrial growth rebounded last month as energy shortages eased, Julian Evans-Pritchard and Sheana Yue, economists at Capital Economics, said. But this pick-up is likely to be short-lived given the deepening downturn in property construction.

Further, economists noted that the pace of recovery in retail sales slowed and the near-term outlook for services activity is being clouded by renewed virus outbreaks.

During January to October, fixed asset investment was up 6.1 percent annually, but slower than the 7.3 percent expansion logged in January to September period. This was slightly weaker than the economists’ forecast of 6.2 percent.

The unemployment rate held steady at 4.9 percent in October.

October’s growth in industrial production, investment and retail sales was very mixed, Iris Pang, an economist at ING said. Sudden electricity outages will probably not re-occur.

But questions remain about real estate policies and the unexplained sluggishness of infrastructure investment and the outlook for 2022, the economist added.

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