China’s retail sales shrink far more than expected, while industrial production disappoints

Several “robot arms” work on an automatic assembly line for the final wheel hub at a production workshop in Anqing city, Anhui province, China, on Dec. 9, 2022.

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BEIJING – China reported economic data on Thursday that missed expectations across the board during a month in which the broader Covid-19 regime has struggled to grow.

Retail sales fell 5.9% in November from last year, the National Bureau of Statistics.

This is worse than expecting a drop of 3.7%, according to analysts polled by Reuters, and a bigger drop than the 0.5% annual drop in October.

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Industrial production grew by 2.2% in November from a year ago, missing the forecast of a 3.6% increase. The reported pace was also slower than the 5% increase in October.

Fixed asset investment in the year to November fell to 5.3% year-on-year growth, missing Reuters expectations for a 5.6% rise. Official printing also declined from 5.8% growth in the first 10 months of the year.

Investment in infrastructure picked up pace in November from October to date, while manufacturing output slowed slightly. Investment in real estate has fallen sharply amid the ongoing economic downturn.

Weak production in China will lower commodity prices but could disrupt supply chains, Fed Chairman Powell said.
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The urban unemployment rate rose to 5.7% in November. The unemployment rate for young people aged 16 to 24 remains very high at 17.1%.

The decline in retail sales brought the total for the year to date by 0.1% from the first 11 months of last year.

Food and medicine were the only sub-categories that saw sales growth in November from a year ago, according to the statistics office. Clothing and footwear saw sales decline by 15.6%.

Internet sales of physical goods increased by just 4% year-over-year in November, down sharply from the previous month, according to CNBC statistics obtained by Air Information.

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Sweeping changes to Covid

Over the past two weeks, China has largely rolled back many of the Covid-related restrictions that have restricted domestic travel and business activity. The authorities emphasized the vaccination of the elderly, and encouraged the Covid patients to return home.

Anecdotally, at least in Beijing, a significant share of the population has since become ill, if not tested positive for Covid, amid extremely cold weather.

A day before the data release, China’s National Bureau of Statistics canceled its press conference scheduled for Thursday without explanation.

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