(Bloomberg) -- China’s economy showed signs of stabilizing and regaining growth momentum in November, adding to the good news for the nation’s outlook after a preliminary trade deal with the U.S. was reached last week.
Industrial output rose 6.2% from a year earlier, versus a median estimate of 5.0%. Retail sales expanded 8.0%, compared to a projected 7.6% increase. Fixed-asset investment was unchanged at 5.2% in the first eleven months, the same as forecast.
Key Insights
- The data show that efforts to brake the slowdown in the economy may finally be taking root, after a year in which the long-term deceleration in output was exacerbated by uncertainty overseas and weak demand at home.
- “The data look all good at first glance,” said Betty Wang, senior economist at Australia & New Zealand Banking Group Ltd. “But there are no evident signs that the sluggishness is turning around” she said, pointing out that the rebound in retail sales is probably due to a one-off factor, such as the Singles Day promotion, and that improvement in industrial production might be because of quarter-end spikes.
- For 2020, the nation’s leaders said last week that they want to prioritize stability and keep growth within a “reasonable range.” Fiscal policy should be more proactive and effective, while prudent monetary policy should be “flexible and appropriate,” according to a statement released after the Central Economic Work Conference.
- On Friday, China and the U.S. announced they’d come to a preliminary trade agreement, staving off higher tariffs this month. That might bring some certainty to business and encourage investment.
- However, the promised reductions in tariffs are unlikely to take effect until February at the earliest and that may postpone the real-world impact. Chinese exports to the U.S. fell in 10 of the 11 months this year.
“The November activity data showed a decent rebound in production and demand, reflecting effects of supportive policy and favorable seasonal factors.’
“Even so, downward pressures on the economy remain. Cyclical policy easing is expected to continue, though likely with a little less intensity.”
Chang Shu, chief Asia economist at Bloomberg Economics
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- The jobless rate was 5.1% in November, about the level it has been all year. There will be more than 13 million new urban jobs created this year, well above the 11 million target for the year, according to the Statistics Bureau.
