Analysts at Nomura note that China’s industrial production (IP) growth ticked up to 5.9% y-o-y in October from 5.8% in September, while fixed asset investment (FAI) growth quickened to 5.7% y-o-y ytd from 5.4% in September, despite a slowdown of property investment to 9.7% y-o-y ytd from 9.9%.
Key Quotes
“Retail sales growth dropped to 8.6% y-o-y from 9.2%. Activity data in October are largely in line with our view that the China slowdown may see some respite in Q4 due to: 1) the front-loading of exports before year-end as Chinese exporters widely expect tariff hikes from 10% to 25% on USD200bn of Chinese exports to the US; and 2) a significant easing of the anti-pollution campaign which closed production in many sectors last winter in 28 cities.”
“Retail sales (a proxy for consumption) have not been affected either by the frontloading or the easing of the anti-pollution campaign, so their slowdown may be a better barometer of the economy, in our view. We believe the worse is yet to come, with growth slowing faster into spring 2019.”
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