China released some very important second tier data on Saturday which suggests that the economy was in better shape in November than many believe.
Retail sales rose 11.2%, just beating expectations of a rise of 11.1%. That’s the fastest pace of sales growth in 11 months CommSec’s chief economist Craig James said in a note to clients Saturday. He also noted that when purchases of fuel (which are down with the lower oil price) are subtracted from the data retail sales growth is actually much faster. That suggests this is an even stronger result.
Industrial production data for November was was also out printing a 6.2% year on year growth rate. That’s the fastest pace of growth in 5 months and above the 5.6% growth rate the market had forecast. Urban investment was also up at the fastest pace in 11 months rising 10.2% against expectations of a 10.1% year on year growth rate.
Other data also released showed money supply was up 13.7% in the year to November (13.4% forecast) while new loans rose 708.9 billion from the 700 billion forecast. That left loan growth a little lower than expected at 14.9% year on year.
While the data for the most part was was only slightly better than expected, it did highlight that the PBOC’s policy measures do seem to be gaining traction James said. He took dead aim at the China bears writing in a note to clients that (our emphasis):
The doomsayers will need to find another target – Chinese economic data uniformly beat market expectations in November and the lift in annual production growth was the greatest in a year. Not only did retail sales beat forecasts, but so did production and investment. Improved growth in the global economy and stimulus measures at home have served to lift economic activity in China.
To underline his bullish take, James added that “Chinese consumers are clearly spending freely. Sales of household appliances including TVs and stereos were up 18 per cent on a year ago with mobile phones and cars in demand.”
He also highlighted that “real consumer spending is up 11 percent over the year – and amazingly it has maintained double-digit annual growth for 11 years.”