The Chinese government recently released economic data for October. It was a mixed bag. On the one hand, retail sales rebounded nicely. Investment in manufacturing grew strongly. On the other hand, property investment continued to fall sharply while industrial production grew more slowly than expected. Let’s look at the details.

In October, retail sales in China were up 4.8% from a year earlier, the strongest growth since February. Some categories saw very strong growth. This included sports and entertainment (up 26.7%), household appliances (up 39.2%), and cosmetics (up 40.1%). It is possible that some of the stimulus measures implemented by the government either boosted spending or boosted confidence on the part of households.

On the other hand, home prices continued to decline as the troubled property sector continued to implode. In China’s 70 largest cities, prices of newly built homes were down 5.9% from a year earlier, the sharpest decline since 2015. Prices fell even more sharply in Guangzhou (down 10.4%) and Shenzhen (down 8.1%). However, prices were up 5% in Shanghai. The decline in prices implies a loss of wealth for households. That can encourage households to save more and spend less.

Meanwhile, industrial production was up 5.3% in October versus a year earlier, roughly in line with the experience of the last six months. Manufacturing output was up 5.4%. In addition, fixed asset investment for the first 10 months of 2024 was up a modest 3.4% from a year earlier. Investment in manufacturing was up 9.3% while investment in property was down 10.3%.

As reported previously, exports grew strongly in October. Yet given the likelihood of significant US tariffs on China, and the deteriorating relationship between China and the European Union (EU), there could be challenges for China to continue to grow based on exports. The more modest growth of domestic demand is a concern. The recent fiscal policy moves by the government are meant to boost domestic demand. It is too early to say if this will be successful.