People carry bags as they visit the Wangfujing shopping street in Beijing, on Nov. 14.Ng Han Guan/The Associated Press
China’s economy suffered a broad slowdown in October as factory output grew more slowly than expected and retail sales fell for the first time in five months, underscoring faltering demand at home and abroad.
The world’s second-largest economy is facing a series of headwinds including protracted COVID-19 curbs, global recession risks and a property downturn. In a sign of persistent weakness in sector, data on Tuesday also showed property investment falling at its fastest pace since early 2020 in October.
The downbeat data poses a challenge for Chinese policy-makers as they steer the $17-trillion dollar economy through choppy waters, following recent moves to ease some COVID curbs and give financial support to the struggling property sector.
“October activity growth broadly slowed and missed market expectations, pointing to a weak start to Q4 as a worsening COVID situation, prolonged property downturn and slower export growth more than offset continued policy stimulus,” analysts at Goldman Sachs said in a note.
Industrial output rose 5.0 per cent in October from a year earlier, missing expectations for a 5.2 per cent gain in a Reuters poll and slowing from the 6.3 per cent growth seen in September, data from the National Bureau of Statistics (NBS) showed on Tuesday.
Retail sales, a gauge of consumption, fell for the first time since May, when Shanghai was under a city-wide lockdown. Sales dropped 0.5 per cent, against expectations for a 1.0 per cent rise and compared with a 2.5 per cent gain in September.
A week-long National Day holiday did little to boost consumption in October, traditionally a popular month for domestic travels.
COVID outbreaks widened across the country in October, disrupting the pandemic-sensitive services sector, including the restaurant industry. China’s catering revenue slumped 8.1 per cent, down sharply from a 1.7 per cent drop in September, NBS data showed.
In response to the weak data, investment bank JPMorgan revised down its year-on-year GDP forecast for China in the fourth quarter to 2.7 per cent from a prior 3.4 per cent, while Citi also trimmed to 3.7 per cent from 4.6 per cent previously.
Domestic COVID containment measures were placing a “huge” pressure on the economy, said NBS spokesperson Fu Linghui, adding that downside risks from the global economy were rising.
“The impact from the triple pressures on economic operations – shrinking demand, supply shocks and weakening expectations – is growing,” said Fu at a news conference in Beijing.
The economic outlook remains gloomy despite Beijing’s move to ease some COVID curbs, said Zichun Huang, economist at Capital Economics.
“With exports cooling, the property sector still in the doldrums and the zero-COVID policy likely to remain in place longer than many hope, the near-term outlook is gloomy.”
Despite the disappointing figures, Chinese stocks rose on Tuesday on signs of easing Sino-U.S. tensions after a meeting between U.S. President Joe Biden and Chinese leader Xi Jinping, while Beijing’s latest supportive steps also lifted sentiment.
Property investment fell 16.0 per cent year-on-year in October – its biggest drop since January-February 2020, according to Reuters calculations based on NBS data. It slumped 12.1 per cent in September.
Property sales measured by floor area dropped 23.2 per cent year-year in October, falling for a 15th straight month, with buyers reluctant to take on more debt as the economy slows amid protracted COVID restrictions.
China’s property sector has slowed sharply as the government has sought to restrict excessive borrowing. A plan to shore up liquidity outlined by Chinese regulators on Sunday sent Chinese property stocks and bonds soaring on Monday.
Chinese financial regulator said in a notice published on Monday it will allow property developers to access some presale housing funds, in the latest move to relieve the liquidity crunch.
“It is clear that new policies to boost domestic demand are needed to refuel China’s fragile recovery. Sluggish consumption and faltering property investment remain dawdlers, due to still-weak expectations on household income and macro growth,” said Bruce Pang, chief economist at Jones Lang Lasalle.
Fixed asset investment expanded 5.8 per cent in the first 10 month of the year, versus expectations for a 5.9 per cent rise and growth of 5.9 per cent in January-September.
Hiring remained low among companies growing increasingly wary about their finances.
The nationwide survey-based jobless rate stayed at 5.5 per cent in October, unchanged from September. The survey-based jobless rate in 31 major cities picked up to 6.0 per cent from 5.8 per cent in September.
The country is on track to miss its annual growth target of around 5.5 per cent, analysts say. Economists in a Reuters poll expect the economy to grow 3.2 per cent in 2022.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
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