By Mark Magnier, William Kazer and Richard Silk
BEIJING--China's industrial production grew at a slower pace in
November providing the latest snapshot of weakness in the world's
second-largest economy amid lackluster domestic demand and the
temporary closure of thousands of factories for an international
meeting.
While the loss of momentum reported Friday in industrial
production, a closely watched gauge of factory output, was
partially offset by improved retail sales, it wasn't enough to
reverse China's broader slide.
"This reconfirms what all the other data says, that the slowdown
in China continues unabated," said Société Générale CIB economist
Klaus Baader. "On the whole, it's a pretty disappointing set of
numbers."
The weaker-than-expected factory output figures dovetail with a
number of other recent signs of economic weakness in manufacturing,
including lower steel production, reduced coal consumption by the
nation's six largest power companies and lower purchasing managers
index readings.
Fixed asset investment on a year-to-date basis also slowed last
month on sluggish factory investment. And housing sales fell at a
faster rate last month than in October, undercutting investor hopes
that the worst was over in this economically vital sector.
"I thought that the pickup would be short-lived, but it's been
even shorter-lived than I expected," said UBS economist Wang
Tao.
While Beijing's decision to host the Asia Pacific Economic
Cooperation meeting last month may have boosted China's global
image, it didn't help its economy, analysts said.
Some 40,000 construction sites and over 9,000 factories saw
production temporarily halted and another 4,000 factories slowed
down during the 12-day period around Beijing leading up to the
early November meeting to check air pollution, said Goldman Sachs,
which estimated that this may have reduced November's industrial
output by 0.5 percentage points.
"Heavy industries are still a major part of the industrial
sector," said HSBC economist Ma Xiaoping. "Guess there's a price to
pay for blue skies."
Cement, chemicals and particularly steel factories in the region
around the capital were hard hit, cutting China's November crude
steel production by 5 percentage points, UBS said.
Retail sales last month provided some much-needed positive news
tied to strong online sales during Singles' Day--a holiday devoted
to unmarried people--although some analysts said they expected
consumers to dial back a bit in December after the concentrated
shopping binge.
Online sales jumped on Nov. 11 with website Tmall reporting a
65% rise, JD.com reporting that sales tripled and GOME posting an
almost sevenfold sales rise, year-over-year, prompting department
stores to counter with their own sizable discounts that boosted
sales further.
China's National Bureau of Statistics said Friday that
industrial production growth was 7.2% year-over-year in November,
below market expectations and down from growth of 7.7% in
October.
Fixed asset investment in nonrural areas rose 15.8% in the
January-November period, the statistics agency said, down from a
gain of 15.9% in the first 10 months. And retail sales grew 11.7%
year-over-year last month, the statistics agency said, a slight
increase from the 11.5% rise reported in October.
In the economically vital real estate sector, housing sales last
month fell 12% by value, compared with the same month of 2013, more
than the 3.1% on-year drop in October. Ms. Wang of UBS said China's
stumbling property market--which has hit construction hard and
threatens to drag down other industries from steel to
furniture--represents the biggest risk by far to the Chinese
economy.
Beijing released the weak economic indicators one day after the
nation's policy makers said at a policy meeting that they would try
to balance steady economic growth and structural reforms next year.
While the government didn't announce a 2015 growth target at the
meeting, called to set economic priorities for next year, it is
widely expected to be below this year's level of about 7.5%.
"China still has some challenge to deliver its 'around 7.5%,'"
said ANZ economist Hao Zhou.
China's gross domestic product grew at 7.3% year-over-year in
the third quarter, its lowest pace in five years. Beijing said on
Thursday its main targets for this year are within reach.
Liyan Qi
Write to Mark Magnier at mark.magnier@wsj.com, William Kazer at
william.kazer@wsj.com and Richard Silk at richard.silk@wsj.com
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