Chinese retail sales beat forecasts

15th Nov 2024 07:26

(Sharecast News) - Retail sales jumped in China last month, official data showed on Friday, in contrast to the ongoing gloom surrounding the under-pressure property sector.

According to the National Bureau of Statistics, retail sales grew by 4.8% year-on-year in October, the highest rise in eight months and well ahead of expectations. It was also a notable improvement on September's 3.2% increase.

However, while industrial production was also higher, at 5.3%, it narrowly missed forecasts for a 5.6% uplift.

The country's struggling real estate sector also remained depressed, with new home prices falling 5.9% year-on-year, the sharpest slide since 2015.

Investment in the sector also eased, down 10.3% in the 10 months to the end of October, following a 10.1% decline in September.

Fixed asset investment was 3.4%, unchanged on the previous month and narrowly missing forecasts for 3.5%.

The Chinese economy has struggled since the pandemic. It reopened far later than other developed economies and since then has faced sluggish demand both globally and domestically.

Its once-booming property sector, meanwhile, has been hit by by high levels of debt and falling demand.

The authorities have introduced a series of measures in recent months aimed at restarting the economy, including cutting lending rates and a debt refinancing plan for local governments.

An NBS spokesperson told Reuters that the policy measures were having a positive effect and officials would likely step up support.

He said: "Changes in economic operations in September and October have strengthened China's confidence in achieving its 2024 target for economic growth of around 5%."

Betty Wang, lead economist at Oxford Economics, agreed that the stimulus push had "started to bear some fruits".

She continued: "Retail sales once again beat market expectations. The main drivers were the consumer trade-in programme and policy support for EV purchases.

"The property market has also shown some initial responses to the intensified property easing measures.

"However, there is little room for complacency. Weaker than expected CPI and PPI inflation in October suggest that deflationary risks continued to linger in the economy.

"It is also too early to conclude the downward trend in the property market is behind us. The recent uptick in sentiment and home transactions have not translated into a significant boost to property activities."