China’s factory output grew faster than expected in November, supported by stronger energy production and a moderation in raw materials prices.
However, retail sales slowed as new Covid-19 outbreaks hit the world’s second-largest economy.
“Industry in China continued to rebound last month from disruptions caused by power shortages while the recovery in services activity was held back by renewed virus outbreaks,” said Sheana Yue, economist at Capital Economics.
The data, along with a slowdown in investment growth, underlined persistent headwinds facing the world’s second-largest, promoting policymakers to ratchet up support.
“The economy remained quite weak in November,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
“Domestic consumption weakened further, which is driven by the zero-coronavirus policy that hurts the service sector and the continued slowdown in the property sector.”
Beating Expectations
Factory output rose 3.8% in November from a year earlier, official data showed on Wednesday, beating expectations for a 3.6% rise and accelerating from a 3.5% increase in October.
Retail sales in November rose 3.9% from a year earlier, below the 4.6% growth expected in the poll and October’s 4.9% rise.
“Questions have been raised about Chinese consumption being weak, but trends are healthy,” Mitsuko Miyasako, China equity analyst at Jefferies in Tokyo, said.
Fixed asset investment rose 5.2% in the first 11 months from the same period a year earlier, slower than the 5.4% increase tipped by a Reuters poll and the 6.1% in January-October.
China’s economy, which is losing steam after a solid recovery from the pandemic, faces multiple challenges heading into 2022, due to a property downturn and strict Covid-19 curbs that have hit consumer spending.
“A new Covid-19 outbreak in Zhejiang is again triggering local restrictions and factory shutdowns, while troubles in the property sector are likely to hold back property construction for some time,” Yue said.
Some analysts expect fourth-quarter gross domestic product growth to dip below 4% from the 4.9% pace in the previous quarter, although the full-year growth could still be about 8%, above the official target of over 6%.
- Reuters, with George Russell
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