Retail Sales Recovers Further, But Property Drag Remains

China October activity data was slightly better than expected. IP was 4.6% y/y (4.5% was forecast and the prior outcome). Retail sales showed the most impressive beat at +7.6% y/y (7.0% forecast and 5.5% prior). Less upbeat was FAI, slipping to 2.9% ytd y/y, versus 3.1% forecast. Property investment was -9.3% ytd y/y against a -9.1% forecast. Property sales were -3.7% ytd y/y. The jobless rate held steady at 5.0%, in line with forecasts.

• On the IP side, most of the positive shift relative shift came from mining (+2.9% y/y from 1.5% prior) Manufacturing was steady at 5.1% y/y. By product chip production surged 34.5% y/y, but other parts of tech were mixed. Auto manufacturing was +8.5% y/y, led by new-energy vehicles (+27.9% y/y).
• On the retail side, strength was fairly broad based relative to Sep. Restaurants rose to 17.1%y/y from 13.8%, while consumer goods were +6.5% y/y, from 4.6% prior. Automobiles were +11.4% up firmly.
• On the FAI side, private investment remained soft at -0.5% ytd y/y. Infrastructure spending held up at 5.9%.
• Property investment remained weak, with total sales (-4.9% ytd y/y, -3.7% for residential) and new construction (-23.2% ytd y/y) remaining quite depressed and close to recent trends.
• Overall, the data was encouraging from a retail sales standpoint, but offsets are evident in term of continued property related headwinds.