China: Signs of improvement in real activity – Standard Chartered

Standard Chartered analysts suggest that China’s November growth data has beaten the market expectations with industrial production (IP) growth surging to 6.2% YoY from 4.7% in October.

“Services-sector growth edged up to 6.8% y/y from 6.6% prior. The labour market remains resilient, with the surveyed city unemployment rate unchanged at 5.1%. Retail sales growth picked up to 8.0% y/y from 7.2% in October, driven by higher inflation and Singles’ Day sales promotions. Fixed asset investment (FAI) growth accelerated to 5.2% y/y from 3.7% in October on resilient real-estate investment, while infrastructure investment remained soft and manufacturing investment weakened. Overall, growth momentum appears to have improved in November, supporting our forecast of a tentative stabilisation in Q4-2019. The recent Central Economic Work Conference (CEWC) confirmed that the top priority for 2020 is to achieve “a moderately prosperous society”. We expect the government to set a growth target at around 6% for 2020, providing policy support for a slightly higher growth rate. This includes a proactive fiscal policy, with a shift in fiscal support from tax cuts to spending, and an accommodative monetary policy to support expansionary fiscal policy.”