The market got a fresh read on China’s economy Monday, and the news is encouraging – at least on the surface.
Activity data for November looks to have beaten across the board, with industrial output coming in especially strong, rising 6.2% YoY. That’s markedly better than the 5% consensus was expecting and is a welcome reprieve.
Recall that IP rose just 4.7% YoY in October, below even the most pessimistic estimate. It plunged to a 17-year nadir in August, but rebounded the following month. In that context, the October print was a severe letdown, and the November number a huge relief.
And it wasn’t just industrial output. Retail sales rebounded strongly too, rising 8% YoY in November, ahead of the 7.6% economists were expecting and matching the top-end of the range.
YTD fixed-asset investment printed 5.2% – that’s in line. The surveyed jobless rate was unchanged at 5.1%.
To the extent traders were inclined to be bullish on the heels of the trade “deal” (however nebulous and indeterminate it may be), these numbers will add to the good vibes.
Inflation is, of course, still running very hot in China, presenting policymakers with a dilemma amid falling factory gate prices. Monetary accommodation could make the pain worse for consumers, even as it helps shore up domestic demand and activity.
In that context, tariff relief is especially welcome news, as it should mean a locally stable yuan and better sentiment both domestically and abroad.
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Exports unexpectedly contracted in November, but imports rose for the fist time in six months. Meanwhile, credit growth rebounded in November, data out last week showed. (Desktop users can view interactive charts here).
Over the weekend, reports suggested officials will lower the growth target to “around 6%” in 2020, and there are still plenty of observers who worry the pace of expansion could fall below 6% as soon as Q4.
Read more: Mind-Boggling Local Government Debt Dynamics Should Probably Worry China Watchers In 2020
