Retail sales in China rise 3.9% in November, slower than expected

A customer purchases zodiac decorations for the Year of the Tiger at a market in Zhangjiagang city, east China’s Jiangsu Province, December 10, 2021.

Shi Bairong | Future editions | Getty Images

BEIJING – China’s retail sales beat expectations in November, while industrial production beat, according to National Bureau of Statistics data released on Wednesday.

Retail sales in November were up 3.9% from a year ago, below the 4.6% year-over-year increase predicted by a Reuters poll.

The failure came as auto sales have plummeted in recent months, and despite China’s big Singles Day online shopping festival in early November.

Online sales of physical goods grew at a slower pace of 13.2% in November compared to 14.6% in October, with spending on singles offset by inflation, said Bruce Pang, manager. macro and strategic research at China Renaissance, in a note.

“Headwinds and uncertainties are clouding the pace of China’s economic recovery,” he said, adding that he expects Beijing to increase its support for growth in the coming months.

It remains to be seen whether supportive policies can stabilize the economy in the coming months.

Zhiwei Zhang

Chief Economist, Pinpoint Asset Management

Industrial production rose 3.8% in November from a year ago, beating survey expectations of 3.6%.

Capital investment for the year through November increased 5.2% from the same period a year ago, slower than the 5.4% gain predicted by the survey.

Investment in manufacturing and real estate development increased in the first 11 months of the year compared to a year ago, but at a slower pace than the January to October period, the data showed.

Investment in the manufacturing sector increased by 13.7% during the period January to November, compared to an increase of 14.2% during the first 10 months of 2021. Real estate investment increased by 6 % during the period January to November, compared to a growth of 7.2% in the first 10 months. of this year.

“The economy remained fairly weak in November,” Zhiwei Zhang, chief economist at Pinpoint Asset Management, said in a note. He attributed the further weakening of domestic consumption to China’s “zero tolerance” policy to control Covid-19, a slowdown in the real estate sector and a restrictive fiscal policy.

“Fiscal policy is on the verge of turning favorable, but the zero tolerance policy will likely remain unchanged and the real estate outlook is still unclear. It remains to be seen whether political supports can stabilize the economy in the coming months.” , did he declare.

The Chinese economy has come under pressure from a downturn in the housing market as Beijing seeks to reduce developers’ reliance on debt. Real estate, along with related industries, accounts for about a quarter of China’s gross domestic product, according to Moody’s.

New home prices fell 0.3% month-on-month in November, according to Reuters calculations on official data released Wednesday. This is a recovery from October’s 0.2% month-on-month decline and the largest monthly decline since February 2015, according to Reuters.

Unemployment is skyrocketing

Intermittent travel restrictions to control pockets of Covid cases have also limited tourism and business activity, while consumer spending has been subdued.

Income expectations are a major factor in consumer spending. Pang noted that the official purchasing managers index “suggests continued labor market pressure” in manufacturing and services, while construction hires have grown more slowly.

The urban unemployment rate climbed to 5% in November from 4.9% in October, according to data from the Bureau of Statistics. The unemployment rate for 16-24 year olds remained high at 14.3%.

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Exports remained a bright spot for the Chinese economy and grew 22% in November compared to a year ago.

The Chinese authorities have refrained from injecting stimulus into the economy and have taken more cautious measures in the face of rising inflation and tightening monetary policy in other countries.

However, a drop in the People’s Bank of China reserve requirement ratio for most banks took effect on Wednesday.

The move marked the second such reduction this year in the amount of liquidity banks need to have in reserve. The 0.5 percentage point reduction to a weighted average of 8.4% for financial institutions frees up 1.2 trillion yuan ($ 187.5 million), according to the central bank.

– Correction: This article has been updated to remove an inaccurate reference to history growth rate of retail sales in China.

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