China's factory output growth picks up in Nov

BEIJING • China's activity data was stronger than expected last month, with factory output growth picking up to a five-month high, signalling that a flurry of stimulus measures from Beijing may have put a floor under a fragile economy.

Factory output grew an annual 6.2 per cent last month, data from the National Bureau of Statistics showed, quickening from October's 5.6 per cent and beating expectations of 5.6 per cent.

Growth in China's fixed-asset investment, one of the main drivers of the economy, rose 10.2 per cent in the first 11 months, unchanged from the gain in January to October, and higher than an expected 10.1 per cent rise.

Retail sales grew an annual 11.2 per cent last month - the strongest expansion this year - compared with 11 per cent in October. Analysts had forecast 11.1 per cent growth last month.

"While low base could be the factor driving the headline growth, we still have to acknowledge China's data are illustrating signs of stabilisation, albeit at a low level,"said Mr Zhao Hao, senior economist at Commerzbank in Singapore.

The data came after weak trade and inflation readings earlier this week, which underscored the persistent slack in the economy.

The world's second-biggest economy has been hit by weak demand at home and abroad, factory overcapacity and challenges posed by its transition to a consumption-led growth model from one reliant on investments.

With the Fed poised to raise interest rates for the first time in almost a decade at next week's review, the risk of intensifying capital outflows has added to Beijing's policy challenge.China's output of key industrial commodities, including coal and steel, remained weak last month amid chronic oversupply as slowing construction demand took its toll.

Over the past year, the Chinese authorities have launched the most aggressive policy stimulus since the 2008-2009 global financial crisis, including cutting interest rates six times since late last year and lowering bank reserve requirements. But the government has still been struggling to reach its economic growth target of around 7 per cent this year, which would be the weakest pace in a quarter of a century.

REUTERS

A version of this article appeared in the print edition of The Sunday Times on December 13, 2015, with the headline 'China's factory output growth picks up in Nov'. Print Edition | Subscribe