Retail sales in China contracted much more than expected, while industrial production disappointed

Several “robot arms” work on the automated assembly line for a final wheel axle at a production workshop in Anqing City, Anhui Province, China, December 9, 2022.

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BEIJING – China on Thursday reported better-than-expected economic data across the board during the month as widespread COVID controls weighed on growth.

The National Bureau of Statistics said retail sales fell 5.9% in November from a year ago.

That’s worse than expectations for a 3.7% drop, according to analysts polled by Reuters, and a bigger drop than 0.5% down year-on-year in October.

Industrial production grew 2.2 percent in November compared to a year earlier, missing Reuters expectations for a 3.6 percent increase. The reported pace was also slower than the 5% increase in October.

Fixed-asset investment for the year ending November slowed to 5.3% year-on-year, missing Reuters expectations for a 5.6% increase. The official version is also down from 5.8% growth in the first 10 months of the year.

Infrastructure investment accelerated in November from October year-over-year, while manufacturing investment slowed slightly. Investment in real estate has declined at an even sharper pace amid the ongoing stagnation of the industry.

The urban unemployment rate rose to 5.7% in November. The unemployment rate for youth ages 16-24 remained well above 17.1%.

The decline in retail sales led to total year-to-date sales down 0.1% compared to the first eleven months of last year.

Food and drug were the only two subcategories that saw sales grow in November over a year ago, according to the Census Bureau. Apparel and footwear sales decreased by 15.6%.

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Online sales of physical merchandise rose just 4% year-over-year in November, down sharply from the previous month, according to CNBC’s calculations of the data accessed by Wind Information.

Covid sweeping changes

In the past two weeks, China has dramatically removed a raft of Covid-related restrictions that have hampered domestic travel and business activity. Authorities have tightened vaccinations for the elderly, and have encouraged Covid patients to recover at home.

Anecdotally, at least in Beijing, a large portion of the population has since fallen ill, if not tested positive for Covid, amid below-freezing weather.

A day before the data was released, China’s National Bureau of Statistics canceled its in-person press conference scheduled for Thursday without explanation.

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