Chinese consumers pull back, but other indicators stabilize

Government blamed the deceleration on consumers holding off from making purchases until Singles Day, China’s annual discount shopping bonanza. (AFP)
Updated 14 November 2018
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Chinese consumers pull back, but other indicators stabilize

  • Retail sales slowed to an 8.6 percent year-on-year increase in October
  • The NBS blamed the deceleration on consumers holding off from making purchases until Singles Day

BEIJING: Chinese consumer spending slowed in October, official data showed Wednesday, adding to worries over the world’s second-largest economy, but investment and industrial production appeared to stabilize.
Concerns about China have increased in recent months after third-quarter growth came in at its slowest pace in nine years, and as trade frictions with the US have ratcheted upwards.
Chinese officials are currently engaging with their US counterparts as the two economic giants try to work out a compromise on trade ahead of President Xi Jinping’s meeting with Donald Trump later this month at the G20 gathering.
The National Bureau of Statistics said on Wednesday that retail sales slowed to an 8.6 percent year-on-year increase in October, slightly short of estimates and down from 9.2 percent in September.
The NBS blamed the deceleration on consumers holding off from making purchases until Singles Day, China’s annual discount shopping bonanza that was held on November 11.
“Given uncertain and unstable factors abroad, there are concerns over the slower though stable economic development which is facing downward pressure,” bureau spokeswoman Liu Aihua told a news briefing.
“The world economy and trade growth momentum have weakened while international financial markets have been turbulent.”
Exports to the major US market have held up so far but analysts forecast a dimming picture in the months ahead, reinforcing the need for China to rely on its legions of domestic consumers to grow the economy.
The trade row with the US has sapped market confidence, dragging down Chinese equities and the yuan currency.
On the positive side, fixed-asset investment, a key economic driver, showed signs of rebounding.
It expanded 5.7 percent on-year for the first ten months of the year, picking up after hitting record lows this summer as Beijing’s push to get big projects moving this autumn lifted infrastructure spending.
Output at factories and workshops ticked up 5.9 percent in October, an improvement on the 5.8 percent in September, according to the NBS, and ahead of the 5.8 percent forecast in a Bloomberg News survey.
“Despite the uptick in industrial output and investment, we doubt that economic growth has bottomed out just yet,” Julian Evans-Pritchard of Capital Economics wrote in a research note.
He said local governments had held off on issuing bonds in recent weeks as they face budget limits.
“US tariffs have, if anything, acted as a prop to exports recently (due to front-loading by US importers) but are set to become a drag early next year,” he said.


UK core pay growth strongest in nearly 11 years, but jobs growth slows

Data showed the unemployment rate remained at 3.8 percent as expected. (Shutterstock)
Updated 16 July 2019
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UK core pay growth strongest in nearly 11 years, but jobs growth slows

  • Core earnings have increased by 3.6 percent annually, beating the median forecast of 3.5 percent
  • The unemployment rate fell by 51,000 to just under 1.3 million

LONDON: British wages, excluding bonuses, rose at their fastest pace in more than a decade in the three months to May, official data showed, but there were some signs that the labor market might be weakening. Core earnings rose by an annual 3.6 percent, beating the median forecast of 3.5 percent in a Reuters poll of economists. Including bonuses, pay growth also picked up to 3.4 percent from 3.2 percent, stronger than the 3.1 percent forecast in the poll. Britain’s labor market has been a silver lining for the economy since the Brexit vote in June 2016, something many economists attribute to employers preferring to hire workers that they can later lay off over making longer-term commitments to investment. The pick-up in pay has been noted by the Bank of England which says it might need to raise interest rates in response, assuming Britain can avoid a no-deal Brexit. Tuesday’s data showed the unemployment rate remained at 3.8 percent as expected, its joint-lowest since the three months to January 1975. The number of people out of work fell by 51,000 to just under 1.3 million. But the growth in employment slowed to 28,000, the weakest increase since the three months to August last year and vacancies fell to their lowest level in more than a year. Some recent surveys of companies have suggested employers are turning more cautious about hiring as Britain approaches its new Brexit deadline of Oct. 31. Both the contenders to be prime minister say they would leave the EU without a transition deal if necessary. A survey published last week showed that companies were more worried about Brexit than at any time since the decision to leave the European Union and they planned to reduce investment and hiring. “The labor market continues to be strong,” ONS statistician Matt Hughes said. “Regular pay is growing at its fastest rate for nearly 11 years in cash terms and its quickest for over three years after taking account of inflation.” The BoE said in May it expected wage growth of 3 percent at the end of this year.