Apart from an expected rise in retail sales, the rest of China’s remaining economic data for October, released yesterday, was less than impressive.
Retail sales grew by 11.0% in October from a the same month year earlier. That was up from a 10.9% rate in September and the fastest since December last year.
But industrial production slowed to a 5.6% growth rate from 5.7% in September and back to the level in March of this year.
Fixed asset investment in the year to the end of October was up 10.2% from a year ago, down from the 10.3% rate in September and the weakest growth rate since the end of 2000.
Conditions in China’s heavy industrial sector remain weak – with production of cement fell 3.5% in October from the same month in 2014, and electricity production fell 3.2%.
Crude steel output was 66.12 million metric tons, down 3.1% from a year ago. For the first 10 months was crude steel production fell 2.2% to 675.1 million tonnes, from the first 10 months of 2014.
Remember consumer price inflation in China slowed to just 1.3% year-on-year in October, (and fell 0.3% from September, a rare event) the slowest pace since May, while producer prices continued fall, down 5.9%, the same rate for the past three months.
Looking at investment in October and the first 10 months of the year two areas stand out, according to NAB economist, Gerard Burger. He wrote overnight:
In contrast, there remains significant investment growth in both public utilities (14% yoy) and water conservation and environmental management (16%), with these sectors accounting for around 15% of the total investment across the first three quarters of 2015.
But the area of interest is property and the October figures confirm the continuing slow down.
Over the first ten months of the year, housing construction starts fell by almost 15% from 2014. The surprise upturn in starts in September (a 17% jump) was not sustained in October and starts fell 24% last month.
Chinese exports fell 6.9% and imports were down 18.8% for yet another negative month and the all time record trade surprlus of $US61.1 billion was set in October.
These figures confirm the view that China’s economy continues to slow. The only positive was the rise in retail sales and a sharp rise in car sales thanks to the halving in tax on cars with engines of 1.6 litres or less. That concession lasts until the end of 2016. October car sales jumped 11.8% to 2.2 million, according to the state-backed China Association of Automobile Manufacturers. This was up from the 2.1% growth rate in September. The tax cut started on October 1. Sales of sport utility vehicles, the fastest-growing segment and a car popular with China’s rapidly growing middle class, jumped more than 60% in October over the same month a year ago.
