China’s Industrial Output and Retail Sales Record Surprise Growth

China’s industrial output grew surprisingly faster in October, despite the latest wave of COVID-19 cases in the country and supply shortages.

Data from the National Bureau of Statistics (NBS), released earlier in the day, showed that industrial production grew 3.5% year-on-year. Forecasts prepared by Investing.com predicted a 3% growth while a 3.1% growth was recorded in September.

Retail sales also picked up, with a growth rate of 4.9%, higher than forecasts prepared by Investing.com predicting a 3.5% growth. A 4.4% growth was recorded in September.

The unemployment rate was unchanged at 4.9%.

However, fixed asset investment grew 6.1% year-on-year in October, slower than the 7.3% growth recorded in September as well as forecasts prepared by Investing.com predicting a 6.2% growth.

China’s manufacturing sector has slowed down in 2021 due to power shortages and higher raw material prices. But October saw a rebound as power shortages, a key constraint on industrial output in September, eased, with power supply climbing 11.1% in October from a year earlier, according to Bloomberg.

“The national economy was generally stable and maintained the trend of recovery,” the NBS said in a statement. “However, we must be aware that the international environment is still complicated and severe with many unstable and uncertain factors.”

Retail sales benefited from pre-sales ahead of the Single’s Day shopping festival, also, the National Holiday in October drove the catering and accommodation sales, NBS spokesman Fu Linghui said at a briefing.

Meanwhile, concerns about China’s property market remained, as property giants China Evergrande Group and Kaisa Group continue to steer towards looming defaults.

The government is expected to maintain curbs, which might lead to weaker growth into 2022, and GDP growth is also expected to slow down. GDP growth is expected to slow to 3.5% in the fourth quarter of 2021, hit 8% for 2021, and weaken to 5.4% in 2022, according to a Bloomberg survey.

“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.”