MNI Analysis: China Oct Ind Output Rebounds; Spending Weakens

     BEIJING (MNI) - China's economic performance in October showed some

strengths with industrial output and fixed-asset investment (FAI) recording

upticks, even as retail sales dipped, according to data by the National Bureau

of Statistics (NBS) on Wednesday.

     Industrial output grew 5.9% y/y in October, picking up from a

three-year-low 5.8% in September, and beat the 5.8% median of an MNI forecast

survey. Mining rebounded helped by supply-side reform and higher commodity

prices while manufacturing sector slowed.

     FAI grew 5.7% in the first 10 months, higher than the 5.5% projected by

MNI. It expanded from the 5.4% Jan-Sept. Infrastructure investment gained 3.7%,

0.4 percentage point higher than Jan-Sept. Infrastructure spending added 0.8

percentage point incremental gain to the headline FAI, according ANZ. This more

than offset slower property investment.

     Property investment slowed to 9.7% in Jan-Oct from 9.9% gain in Jan-Sept.

That may confirm reports of cooling demand, rising financing costs and housing

curbs.

     Retail sales, gauging China's consumer demand, slowed to 8.6% y/y from 9.2%

gain in September. It came short of MNI's 9.1% projection. A slowdown in auto

sales and home decorations, hurt by soft property market, contributed to the

weakening demand, China Fortune Securities said in a report.

     The NBS also attributed the contraction to the unusual timing of a

traditional holiday and a shift in consumption patterns as E-commerce replaces

traditional shops. Consumers delayed purchases as they waited for major sales on

Nov 11, popularized by online merchants, the NBS said.

     Online purchases grew 25.5% in October to CNY7.054 trillion in the first 10

months this year.

     However, retail sales are expected to strengthen as government tax cuts

begin to take effect.

--MNI Beijing Bureau; +86 10 8532 5998; email: william.bi@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

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