China’s economy performed better than expected in October as retail sales climbed and energy shortages eased, though a slump in property and rising COVID outbreaks show the recovery isn’t on solid ground yet.
Industrial output rose 3.5 per cent in October from a year earlier, while retail sales growth accelerated to 4.9 per cent, beating economists’ forecasts. Growth in fixed-asset investment eased to 6.1 per cent in the first 10 months of the year, with tighter curbs on the real estate market continuing to weigh on the sector. The surveyed jobless rate was steady at 4.9 per cent.
The better-than-expected numbers provides some relief after the economy’s momentum weakened in recent months on the back of energy shortages, Beijing’s reining in of the property market and widespread COVID-19 outbreaks. However, the recovery remains uncertain, given the outsized contribution of real estate — at 25 per cent of GDP when related industries are included — and the disruption to travel and spending from the government’s stringent virus restrictions.
“Overall there is some improvement, especially in the mining and utility industries,” said Lu Ting, chief China economist for Nomura Holdings Inc. “But other areas actually didn’t improve substantially and remain at low levels, especially for investments.”
Lu said rising prices and consumers panic-buying goods at the beginning of October may have contributed to the pickup in retail spending last month. When adjusting for inflation, retail sales rose 1.9 per cent in October from a year ago, a slower pace than in September.
Electricity shortages, which had been a key constraint on industrial output in September, eased last month, with power supply climbing 11.1 per cent in October from a year earlier.
The property slump continued to weigh on output, with production of construction-related commodities, such as steel and iron, contracting. Investment in new construction declined for a fourth month, dropping 7.7 per cent from a year ago.
Separate data from the NBS showed home prices fell 0.25 per cent in October from the previous month, a bigger decline than in September. The benchmark stock index was about 0.3 per cent lower, with property developers declining more after the news on falling home prices.
What Bloomberg Economics Says…
China’s stronger-than-expected October activity offers some assurance the economy is not sliding deeper into a rut, though there’s no sign it’s set for a turnaround. An extra working day in the month was one reason for the better picture. Even accounting for that, output appeared to stabilize.
Chang Shu, chief Asia economist
The NBS said in a statement the economy “was generally stable and maintained the trend of recovery.” It warned that the “international environment is still complicated and severe with many unstable and uncertain factors.”
Iris Pang, chief economist for Greater China at ING Groep NV, said rising COVID cases will continue to weigh on the economy’s outlook.
“The potential for sudden strict domestic travel restrictions means that people are still very hesitant about travel,” she said. “This could continue into the coming Chinese New Year holiday in February 2022.”
The slowdown has put the spotlight back on policy makers, who have so far taken a muted approach to stimulus, preferring to “fine-tune” policies rather than flood the economy with support. In line with that approach, the People’s Bank of China refrained from injecting additional cash into the financial system in its monthly liquidity operation on Monday, rolling over all the loans maturing instead.
Most economists expect Beijing to stick with the property curbs, resulting in weaker growth into next year. GDP growth is expected to slow to 3.5 per cent in the final quarter, reach 8 per cent for the full year and weaken to 5.4 per cent in 2022, according to a Bloomberg survey of economists.
“Growth will likely weaken in the rest of this year,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management Ltd. “The slowdown in the property sector continued, which is the key risk for the macro outlook in the next few quarters.”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
