(Bloomberg) -- China’s recovery gathered pace in November, supported by strong demand from home and abroad, putting the economy further ahead of its peers as the only major one likely to expand this year.
- Industrial output rose 7% in November from a year earlier, in line with the median estimate in a Bloomberg survey of economists. Retail sales expanded 5% in the period, as projected. Fixed-asset investment grew 2.6% in the first 11 months of the year from the same period in 2019, also as expected
- The unemployment rate inched lower to 5.2% from 5.3%
Key Insights
- The data shows the breadth of the recovery since a contraction in output in the first quarter triggered by the coronavirus pandemic. An industrial-led rebound has been followed by a pickup in consumer spending. Exports have rocketed in recent months as a return to virus restrictions in many of China’s biggest markets fueled demand for medical equipment and work-from-home electronic devices
- Retail sales were likely boosted by the ‘Singles’ Day’ shopping festival on Nov. 11, signaling solid demand. For first 11 months of the year, sales were still down 4.8% compared with the same period in 2019
- The profitability of industrial firms has rebounded, although some companies are struggling under large debt loads. A series of recent defaults by state-owned enterprises roiled local debt markets and is making it harder for some to borrow money
- A set of early indicators showed China’s economic recovery stabilizing toward the end of the year. Growth is set to reach 5.9% in the current quarter and 2% for the full year, according to economists surveyed by Bloomberg
- Assuming that Covid-19 is kept under control, China’s rebound should continue through the final quarter, sustained by “the continued recovery of consumption, robust infrastructure investment, resilient property activities, and strong exports,” UBS Group AG (SIX:UBSG) economists led by Ning Zhang wrote in a report before the data release
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- Investment continues to be fueled by state-owned businesses, which grew 5.6% in the January-November period from a year ago. Fixed-asset investment by private companies gained 0.2% in the period, the first time it was positive this year
- For a breakdown of manufacturing growth, click here
- The central bank continued to provide ample liquidity to support the recovery, injecting 950 billion yuan ($145 billion) of one-year cash via the medium-term lending facility on Tuesday, more than offsetting the 600 billion yuan that matures in December
- The retail sales figures boosted sentiment among consumer stocks. The MSCI China Consumer Staples Index reversed an earlier decline to gain 0.4%
(Updates with additional details)
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