China’s retail sales grow by 3.9% in November — slower than expected

China’s retail sales grow by 3.9% in November — slower than expected

A customer buys zodiac decorations for the Year of the Tiger at a market in Zhangjiagang city, East China’s Jiangsu province, Dec. 10, 2021.

Shi Bairong | Future Publishing | Getty Images

BEIJING — China’s retail sales missed expectations in November, while industrial production beat, according to data from the National Bureau of Statistics out Wednesday.

Retail sales for November grew by 3.9% from a year ago, below the 4.6% year-on-year rise forecast by a Reuters poll.

The miss came as auto sales have fallen in recent months, and despite China’s big Singles Day online shopping festival in early November.

Online sales of physical goods rose by a slower 13.2% pace in November compared to October’s 14.6%, with Singles Day spending offset by inflation, Bruce Pang, head of macro and strategy research at China Renaissance, said in a note.

“Headwinds and uncertainties are clouding the recovery pace of China’s economy,” he said, adding he expects Beijing to increase its support for growth in the coming months.

It remains to be seen if policy supports can stabilize the economy in the coming months.

Zhiwei Zhang

chief economist, Pinpoint Asset Management

Industrial production grew by 3.8% in November from a year ago, topping the poll’s 3.6% expectation.

Fixed asset investment for the year through November grew by 5.2% from the same period a year ago, slower than the poll’s forecast 5.4% gain.

“The economy remained quite weak in November,” Zhiwei Zhang, chief economist, Pinpoint Asset Management, said in a note. He attributed the further weakening in domestic consumption to China’s “zero-tolerance” policy to control Covid-19, a slowdown in the property sector and tight fiscal policy.

“Fiscal policy is about to turn supportive, but the zero tolerance policy will likely stay unchanged, and the property outlook is still unclear. It remains to be seen if policy supports can stabilize the economy in the coming months,” he said.

China’s economy has faced pressure from a slowdown in the property market as Beijing seeks to curb developers’ reliance on debt. Real estate, along with related industries, accounts for about a quarter of China’s gross domestic product, according to Moody’s.

Intermittent travel restrictions to control pockets of Covid cases have also limited tourist and business activity, while consumer spending has been subdued.

Income expectations are a major factor for consumer spending. Pang noted that the official purchasing managers’ index “suggests ongoing job market pressure” in manufacturing and services, while hiring in construction sector has expanded more slowly.

The urban unemployment rate ticked up to 5% in November from 4.9% in October, data from the statistics bureau showed. The jobless rate for those from 16 to 24 years old remained a high 14.3%.

Exports have remained a bright spot for China’s economy, and rose 22% in November from a year ago.

Chinese authorities have refrained from pouring out stimulus into the economy, and have taken more reserved actions amid rising inflation and tighter monetary policy in other countries.

However, a People’s Bank of China cut to the reserve requirement ratio for most banks took effect on Wednesday.

The move marked the second such reduction this year for the amount of cash banks need to have on reserve. The 0.5 percentage point cut to a weighted average of 8.4% for financial institutions frees up 1.2 trillion yuan ($187.5 million), according to the central bank.

This is a breaking news story. Please check back for updates.

— Correction: This article has been updated to remove an inaccurate reference to the historical pace of growth in China’s retail sales.

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