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Arjen van Dijkhuizen, senior economist at ABN AMRO, explains that after showing improvement in September, China’s macro data for October published yesterday were weaker again and below expectations.

Key Quotes

“Industrial production growth fell back to 4.7% yoy (Sept: 5.8%, consensus: 5.4%), comparable to the lows seen in July/August.”

“Growth of retail sales dropped to 7.2% yoy (Sept/consensus: 7.8%), the weakest pace since 1999.”

“Fixed investment slowed to 5.2% yoy (Sept/consensus: 5.4%), the lowest number on record. The slowdown of investment is driven by private investment, which fell back to a three-year low of 4.4% yoy in October. State-led investment is holding up better, reflecting government measures directed at stimulating infrastructure investment by local governments.”

“What is also striking is the extreme volatility of the macro data over the past couple of months. As far as business confidence is concerned, this could be partly explained by the many twists and turns in the US-China trade conflict next to the seasonal distortions that are typical for China.”

“While its trend points to a gradual   slowdown, though less shallow than GDP growth, Bloomberg’s monthly GDP tracker has fluctuated in an unusually large range this year with a peak of 7.9% yoy in March) and a bottom of 5.8% yoy in August.”