Data Drop Confirm Broad Slowdown In China

By Glenn Dyer | More Articles by Glenn Dyer

The final dump of Chinese economic data for December and 2018 has confirmed the economy is in the midst of a worrying slowdown.

Investment is weak, retail sales a touch stronger, but hardly buoyant and industrial production mixed, while the housing sector continues to cool.

As expected GDP growth slowed to 6.4% in the final quarter and 6.6% for the year (see separate story) and is now running at its lowest level for nearly three decades.

Industrial output grew 5.7% in December from a year earlier, beating forecasts of 5.3% and topping November’s 5.4% rate, despite the surprise fall in exports. But that was noticeably slower than the 7.2% rate in January and February.

Fixed-asset investment rose 5.9% in 2018, missing expectations of a 6.0% increase and the slowest annual growth since at least 1996. It was running at close to 8% at the start of the year and more than 8% in 2017.

Retail sales rose 8.2% in December year-on-year, in line with forecasts. But the pace was only marginally ahead of November’s weak 8.1%, and it is still around 15-year lows.

Retail sales growth peaked at 9.2% in March of last year.

Growth in China’s property investment slowed in December to the second slowest pace in a years demand and sales slowed and finance became harder to get.

Real estate investment, which mainly focuses on the residential (but includes commercial and office space), rose 8.2% in December from a year earlier, down from 9.3% in November, according to Reuters’ analysis of data released by National Bureau of Statistics (NBS) on Monday.

That was just ahead of the slowest pace in 2018 of 7.7% recorded for October.

For the full year, property investment increased 9.5% from the year-earlier period, down from 9.7% in January-November.

In December, property sales by floor area, a good indicator of demand, rose a touch by 0.9% from a year earlier, the first gain in four months and much better than November’s 5.1% slump.

But for 2018, property sales by area rose a modest 1.3% from a year earlier, which is the real story of China’s property sector in 2018.

Funds raised by China’s property developers grew by an annual 6.4% in 2018, much slower than the 7.6% in the 11 months to November.

Measured by floor area, construction starts rose 20.5% from a year earlier, down from 21.7% in 11 months to November. Still solid but the test will be the continuation of this rate deep into 2019.

China’s total crude steel output fell to 76.12 million tonnes in December, down marginally from 77.62 million tonnes in November, but that was up 8.2% from December 2017 (and from December 2016).

The world’s biggest steelmaker churned out a record 928.26 million tonnes of crude steel in 2018, the data showed, up 6.6% from 2017’s 831.7 million tonnes. thanks to solid demand in the first nine months of the year.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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