China’s factory, retail sectors skid as COVID hits growth

BEIJING  -China’s economy lost more steam in November as factory output growth slowed and retail sales extended declines, both missing forecasts and clocking their worst readings since May, hobbled by surging COVID-19 infections and widespread virus curbs.

The data suggested a further deterioration in economic conditions as lockdowns in many cities, a persistent property-sector crunch and weakening global demand pointed to a bumpy road ahead even as Beijing looked to ditch some of the world’s toughest anti-virus restrictions.

Industrial output rose 2.2 percent in November from a year earlier, missing expectations for a 3.6-percent gain in a Reuters poll and slowing significantly from the 5 percent growth seen in October, the National Bureau of Statistics (NBS) data showed on Thursday. It marked the slowest growth since May when Shanghai was under lockdown, partly due to disruptions in key manufacturing hubs Guangzhou and Zhengzhou.

Retail sales fell 5.9 percent amid broad-based weakness in the services sector, also the biggest contraction since May. Analysts had expected the gauge of consumption to shrink 3.7 percent, accelerating from a 0.5 percent dip in October.

China’s economy has been depressed by its zero-COVID policy, as tight movement controls hampered consumption and production. Other headwinds the country faces are its property slump, global recession risks and geopolitical uncertainties.

Property investment fell 9.8 percent year-on-year in January-November, after declining 8.8percent in January-October, dragging on the sector’s downturn.

Policymakers have rolled out support for the sector on almost all fronts, including credit lines from banks, bond financing and equity financing, but analysts said such effects have yet to be seen as home sales still remained weak.

Fixed asset investment expanded 5.3 percent in the first 11 months of the year, versus expectations for a 5.6-percent rise and growth of 5.8 percent in January-October.

Hiring remained low among companies wary about their finances. The nationwide jobless rate rose to 5.7 percent in November from 5.5 percent in October. Youth unemployment was at 17.1 percent, lower than 17.9 percent in October.

The economy grew just 3 percent in the first three quarters of this year and is expected to stay around that rate for the full year, well below the official target of “around 5.5 percent”.

All eyes are on the closed-door annual Central Economic Work Conference, when Chinese leaders gather to set next year’s economic agenda. They will likely map out more stimulus steps, eager to underpin growth and ease disruptions caused by a sudden end to COVID-19 curbs, policy insiders and analysts said.