Your Old China plates’ economy presents a mixed picture for the third quarter, characterised by robust industrial performance and steady GDP growth, but held back by persistent weaknesses in investment and the property market.
The economy grew at a year-on-year rate of 4.8% in Q3, slightly exceeding the consensus of 4.8%, though this represents a deceleration from the previous 5.2%.
A key bright spot was Industrial Production, which surged to 6.5% year-on-year in September, significantly beating forecasts and indicating strong factory output. However, this industrial strength contrasts sharply with other sectors.
Fixed Asset Investment turned negative for the first time in the available data, recording -0.5% growth year-to-date, which points to a significant pullback in capital expenditure. Consumer spending also showed signs of softening, with Retail Sales growth slowing to 3.0% year-on-year in September.
The data also reveals ongoing challenges in the real estate sector, with the House Price Index falling -2.2% in September from a year earlier. In response to these mixed conditions, the People’s Bank of China (PBoC) has maintained an accommodative monetary policy, keeping the 1-year and 5-year Loan Prime Rates (LPR) steady at 3.0% and 3.5% respectively, continuing its support for borrowing and economic activity.
Most Important Macro-Data Points This Week
| Data Point | Region | Date | Key Focus & Potential Market Impact | |
|---|---|---|---|---|
| GDP, Industrial Production & Retail Sales | China | Monday, Oct 20 | Focus: Health of the world’s second-largest economy. Impact: Strong data could boost global commodity currencies (AUD, NZD) and equities; weak data may trigger risk-off sentiment. | China Retail Sales |
| Consumer Price Index (CPI) | Canada | Tuesday, Oct 21 | Focus: Bank of Canada (BoC) inflation path. Impact: Higher-than-expected inflation could strengthen the CAD and put pressure on the BoC to maintain a hawkish stance. | Canada Inflation Rate |
| Consumer Price Index (CPI) | United Kingdom | Wednesday, Oct 22 | Focus: Bank of England (BoE) policy path. Impact: A high print may force the BoE to keep rates higher for longer, supporting the British Pound (GBP). | United Kingdom Inflation Rate |
| Consumer Price Index (CPI) | United States | Friday, Oct 24 | Focus: The week’s highlight; signal for Fed policy. Impact: A soft reading could bolster bonds and risk assets while weakening the USD; a strong figure may revive hawkish fears, unsettling markets. | United States Inflation Rate |
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