Retail sales in China will grow by 3.9% in November, slower than expected
A customer buys zodiac decorations for the Year of the Tiger at a market in the city of Zhangjiagang, Jiangsu Province in Eastern China, December 10, 2021.
Shi Bairong | Future Publishing | Getty pictures
BEIJING – China’s retail sales fell short of expectations in November, while industrial production hit, according to data from the National Bureau of Statistics on Wednesday.
Retail sales for November grew by 3.9% year-on-year, below 4.6% year-on-year growth estimated by a Reuters poll.
The loss came as car sales have fallen in recent months, and despite China̵[ads1]7;s major Singles Day e-commerce festival in early November.
Online sales of physical goods increased at a slower pace of 13.2% in November compared to October’s 14.6%, with Singles Day spending offset by inflation, said Bruce Pang, head of macro and strategy research at China Renaissance, in a note .
“Headwinds and uncertainty mean that the rate of recovery of China’s economy is slipping,” he said, adding that he expects Beijing to increase support for growth in the coming months.
It remains to be seen whether political support can stabilize the economy in the coming months.
Zhiwei Zhang
Chief Economist, Pinpoint Asset Management
Industrial production grew by 3.8% in November from a year ago, topping the measurement’s expectation of 3.6%.
Capital expenditures for the year up to and including November grew by 5.2% from the same period a year ago, slower than the measurement’s forecast of 5.4% gain.
Investments in industry and real estate development increased in the first 11 months of the year from a year ago, but at a slower pace than the period January to October, the data showed.
Investment in manufacturing grew by 13.7% in the period January to November, compared with an increase of 14.2% in the first 10 months of 2021. Real estate investment grew by 6% in the period January to November, compared with 7.2% growth in the first 10 months. months of this year.
“The economy remained relatively weak in November,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, in a note. He attributed the further weakening of domestic consumption to China’s “zero tolerance” policy to control Covid-19, a downturn in the real estate sector and tight fiscal policy.
“Fiscal policy is becoming supportive, but the zero tolerance policy is likely to remain unchanged and real estate prospects remain unclear. It remains to be seen whether policy support can stabilize the economy in the coming months,” he said.
China’s economy has faced pressure from a downturn in the real estate market as Beijing seeks to curb developers’ debt dependence. 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 percent month-on-month in November, according to Reuters’ official data released Wednesday. It marked a rise from 0.2% monthly decline in October, and the largest monthly decline since February 2015, according to Reuters.
Unemployment is rising higher
Intermittent travel restrictions to control pockets of Covid cases have also limited tourism and business activity, while consumption spending has been curbed.
Income expectations are an important factor for consumption. Pang noted that the official Purchasing Managers’ Index “indicates ongoing labor market pressure” in manufacturing and services, while employment in the construction sector has expanded more slowly.
Urban unemployment rose to 5% in November from 4.9% in October, according to data from Statistics Sweden. Unemployment for those aged 16 to 24 was still high at 14.3%.
Exports have been a bright spot for China’s economy, rising 22% in November from a year ago.
Chinese authorities have refrained from pouring out stimulus into the economy, and have taken more reserved measures in the midst of rising inflation and tighter monetary policy in other countries.
However, a cut from the People’s Bank of China to the reserve ratio for most banks went into effect on Wednesday.
The move marked the second such reduction this year for the amount of cash banks need to have in reserve. A 0.5 percentage point cut to a weighted average of 8.4% for financial institutions releases 1.2 trillion yuan ($ 187.5 million), according to the central bank.
Correction: This article has been updated to remove an inaccurate reference to the history the growth rate of China’s retail sales.
