China industrial production, retail sales disappoint in November

  • Economic Indicators News
China industrial production, retail sales disappoint in November
Credit: © Reuters.

By Ambar Warrick Chinese industrial production and retail sales read well below expectations in November, data showed on Thursday, as rising COVID-19 cases and increased restrictions to curb the virus weighed heavily on the economy.

Retail sales were the bigger disappointment of the two, sinking a bigger-than-expected 5.9% in November after shrinking 0.5% in October. Markets were expecting a contraction of 3.7%.

The reading bodes poorly for the Chinese economy in the fourth quarter, given that retail spending is a key driver of economic growth. 

Retail sales also marked their worst drop since May, when the country was also grappling with a severe COVID-19 outbreak. The drop saw cumulative retail sales for the year so far turn negative. 

Separate data showed industrial production grew 2.2% in November, down from the 5% growth seen in October, and well below expectations for growth of 3.6%. The manufacturing sector was hit particularly hard by COVID-19 lockdowns this year, as several industrial hubs including Shanghai and Wuhan introduced a string of restrictions to prevent the spread of the virus. 

Industrial production in November was also hit by instances of civil unrest in several hubs, as workers protested against draconian anti-COVID measures that would have isolated them in their factories. 

Other data also highlighted growing cracks in the Chinese economy. Fixed asset investment grew less than expected in November, while house prices continued to decline steadily. 

The readings show that the Chinese economy is set for a tough fourth quarter, even as the government began relaxing countrywide anti-COVID measures in December. 

The country also saw a sharp rise in COVID cases over the past week, so much so that the government said it is now impossible to effectively track the number of infections. This brewed further uncertainty over a Chinese economic recovery, along with concerns that the country's healthcare system could be overwhelmed. 

Still, China saw a pick-up in road and air transport activity in December, showing that at least some parts of the economy were benefiting from the relaxed anti-COVID measures. 

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