The National Bureau of Statistics kicked off the day of data releases in China with October's 70-city property prices still in decline but showing signs of improvement. New home prices fell by -0.51% month-on-month, up from -0.71% MoM in September, while secondary home prices fell by -0.48% versus a -0.93% MoM move the prior month.
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An encouraging sign was that 11 of the 70 cities saw secondary market prices stabilise or increase, which was far and away the best read of the year. Among these 11 cities, Beijing (1.0%), Shanghai (0.2%), Shenzhen (0.7%) all saw prices move higher in the month, with Guangzhou (-0.4%) the only Tier 1 city with prices continuing to fall. 7 of 70 cities also saw new home prices rise.
According to experts, the early signs are encouraging. With an expected ramp up of unsold home purchases in the coming months and a continued policy focus on halting the decline of the property market, the October data release showed that there is hope of seeing prices gradually bottom out in the coming months.
Retail sales bounced back
Retail sales rebounded to 4.8% YoY, up from 3.2% YoY – significantly beating market expectations and forecasts for a milder uptick. The 4.8% YoY read marked the highest level since the combined January-February read of 5.5% YoY, and helped bring the YTD growth of retail sales from 3.3% YoY to 3.5% YoY. Home appliance sales surged to 39.2% YoY from 20.5% YoY.
Overall, China's manufacturing sector could face further headwinds once additional tariffs from the US are introduced. The view from the analyst's global research team is that this may not be the case until the third quarter of 2025 at earliest, which means that industrial activity could still hold up decently well through the first half of 2025, with room for upside if support policies boosting domestic demand continue to roll out.
There has been a lot of angst in financial markets on the potential impact of Trump 2.0 on China, and the initial market response to China's fiscal package was one of disappointment. The prospect of a Trade War 2.0, combined with a likely slower and shorter global central bank monetary policy easing, will certainly have a dampening impact on growth.
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