Published: Sat, November 16, 2019
Markets | By Otis Pena

China's main growth engines falter in October on trade frictions

China's main growth engines falter in October on trade frictions

"These data support our view that growth headwinds remain strong and the economy has yet to hit bottom", Japanese bank Nomura said in a research note, adding that gross domestic product (GDP) growth is expected to slow to 5.8 percent in the fourth quarter from six percent in the third quarter. Forecasts had been for 5.4 percent.

Industrial output rose 4.7% from a year earlier, versus a median estimate of 5.4%.

China's investment in property development grew 10.3 percent year on year in the period, down from 10.5 percent for the first nine months.

The final round of China's economic data for October continued to paint a picture of a sluggish economy, but the week-long national holiday and 70th birthday celebrations at the start of the month were also a contributing factor to the weaker than forecast performance.

The private sector's investment increased 4.4 percent to 29.15 trillion yuan, 0.3 percentage points slower than that for the first nine months.

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The same was not true for e-cigarette rates, which increased from about 2.8 percent to 3.2 percent previous year . As of Nov 13, 42 deaths have been confirmed in 24 states and the District of Columbia, the agency said.

CHINA'S property investment and sales growth both eased to a three-month low in October, suggesting a critical pillar of the economy is softening, but new construction surged in a sign developers are rushing to promote sales. "Real estate is primed for a further moderation as financing to the sector is being squeezed by a regulatory crackdown", said Martin Lynge Rasmussen, China economist at the group.

In a bid to stop this trend, China's State Council on Wednesday pledged to encourage more spending on infrastructure projects. In October, they bought fewer garments, jewellery and cars compared to a year earlier.

The average mortgage rate for first home purchases posted its fifth month-on-month growth in October, although the uptick was smaller compared with September's reading, according to a market report cited by state-backed Economic Information Daily. But amid concerns over rising CPI inflation, policymakers may prefer low-profile easing measures such as injecting liquidity via the central bank's medium-term lending facility, it said.

Earlier this week, Premier Li Keqiang flagged the need for the more effective use of economic support tools, such as "counter-cyclical adjustments" and local government special bonds.

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