Instant View - China Nov factory output meets forecasts, retail sales jump

Reuters

BEIJING (Reuters) - China's industrial output rose 10.0 percent in November from a year earlier, slightly below market expectations, while retail sales were up a stronger-than-expected 13.7 percent, the National Bureau of Statistics said on Tuesday.

Fixed-asset investment, an important driver of economic activity, climbed 19.9 percent in the first 11 months from the same period last year, the bureau said.

COMMENTARY

NIE WEN, ANALYST, HWABAO TRUST, SHANGHAI

"Industrial output remained at a relatively high level, suggesting the growth momentum in the short-term is quite stable. The retail sales figure is much higher than market expectations, mainly due to strong sales in real estate and auto sectors.

"It shows that household consumption is picking up while spending by government agencies is being cut amid a frugality campaign. We expect retail sales to keep steady growth in 2014.

"Fixed-asset investment is a bit lower than expectations, mainly due to a sharp decline in the manufacturing and mining industries, which are plagued by serious overcapacity.

"An optimistic sign is emerging from private sector investment, which has been improving for two consecutive months, indicating that they have a better outlook for the economy."

RICHARD MARRIOTT, HEAD OF LENDERS AND INVESTORS, EC HARRIS

"One reason we might experience somewhat subdued growth (in fixed asset investment) is the decrease in local government loans. With new economic reforms in the works, local governments may be hesitant to push out massive investment plans before understanding the impact of these reforms, which could in turn negatively affect fixed asset investments."

"Following the reforms outlined by the Third Plenum, we expect to see a larger increase in participation from the private sector in new projects. We expect this trend to take place over a sustained period as new economic reforms are implemented.

TIM CONDON, ECONOMIST, ING, SINGAPORE

"It's hard to see this causing any anxiety to the authorities or causing them to see the need for policy change.

"Growth is about where it was the previous month. The economy is humming along and there is no need for growth upgrades or growth downgrades.

"They can focus on what they need to focus on with no need to worry about growth stabilisation policies."

TING LU, HEAD OF GREATER CHINA ECONOMICS, MERRILL LYNCH, HONGKONG

"We saw a strong retail sales figure for November, which I think is partially because of rebounding confidence due to relatively strong economic growth in the third quarter.

"Industrial output is slightly lower than the market consensus, but actually the 10 percent figure is not really low and what is important is that the base effect in the year earlier is high, as industrial output rebounded at the end of last year.

"We still retain our full-year forecast of 7.7 percent for now."

LINKS

For details, see the website of the National Bureau of Statistics at http://www.stats.gov.cn

MARKET REACTION

The CSI300 Index of top Shanghai and Shenzhen listings was up 0.25 percent after the figures. The yuan was at 6.0714 yuan against the dollar.

BACKGROUND

-- The government has set a 7.5 percent annual economic growth target for 2013, alongside an annual inflation ceiling of 3.5 percent.

(Reporting by China Economics Team)

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