Chinese Economic Indicators Send Mixed Signals
The larger-than-expected YoY drop in house prices coincided with falling unemployment but weakening retail sales, challenging Beijing’s 5% GDP growth target.
Unemployment unexpectedly fell from 5.2% in September to 5.1% in October. A stabilization in the labor market could boost consumer sentiment, potentially reviving domestic demand. While the unemployment rate fell, private sector PMIs pointed to job cuts, highlighting uneven labor market conditions.
Meanwhile, retail sales increased 2.9% YoY in October, down from 3% in September. Crucially, retail sales have trended sharply lower since May’s 6.4% YoY rise, underscoring the effects of US tariffs on the labor market, sentiment, and household spending.
CN Wire commented on weakening domestic consumption ahead of today’s data, stating:
“China is facing its longest slowdown in consumption growth since its post-COVID rebound over four years ago. Retail sales are expected to rise 2.8% year-on-year in October, according to the median economic forecast, marking the fifth consecutive month of deceleration—the weakest gain in over a year. Some of this weakness is technical, due to a high comparison base from last year and one fewer working day in October 2025.”
Other Chinese data signaled a loss of momentum:
- Industrial production rose 4.9% YoY in October, down sharply from 6.5% in September.
- Fixed asset investment fell 1.7% year-to-date in October, YoY, compared with a 0.5% drop in September.
These figures aligned with Citigroup economists’ expectations of weaker numbers due to a high base, calendar effects, and weaker momentum.