China’s factories increased production again last month, sustaining their rapid recovery to more than make up for the lost output of the Covid crisis.
Industrial production in the world’s second-largest economy last month was up 6.9pc compared with October of 2019, unexpectedly maintaining the breakneck speed recorded the previous month.
It means industrial output in the year to date is now 1.8pc higher than over the same period of 2019, despite the impact of the coronavirus pandemic in the early months of 2020.
However, there are some signs of momentum beginning to slow, according to Miguel Chanco at Pantheon Macroeconomics, who estimates monthly output growth of a more modest 0.8pc.
“Much of the weakness last month was concentrated in mobile phone production, based on the partial hard data available. Output in this sector collapsed by an adjusted 9.5pc month on month, sharper than the 1.5pc drop in September,” he said.
“This tarnished the stronger month enjoyed by car factories and manufacturers of integrated circuits. Elsewhere, the momentum in infrastructure-related production, such as cement and steel, continued to roll over, as the fuel provided by local government special purpose bonds continues to run out.”
Retail spending increased by 4.3pc on the year, a touch slower than analysts had expected given the Golden Week holiday, but still up from 3.3pc in September and evidence of further recovery in consumption.
Electric car sales picked up, as did catering and sales of jewellery. Online retail is still booming, up by more than one-fifth compared with last October. Clothes purchases struggled, however.
“Retail sales' rate of increase may be slowing, but they remain the envy of the world,” said Jeffrey Halley at Oanda.
“The data is all the more impressive as October contained an extended national holiday. China is showing no signs of a new US or Europe slowdown impacting on them to date and will lead the world out of recession in 2021.”
The Regional Comprehensive Economic Partnership (RCEP) – which includes 10 Southeast Asian economies along with China, Japan, South Korea, New Zealand and Australia – is the world's largest trade pact in terms of GDP, analysts say.