China: November activity improves, but slowdown is not over

Industrial production surprised positively in November, growing by the highest rate since June (+6.2% y/y vs. +4.7% in October). This was supported by private enterprises and manufacturing production. Favorable seasonal factors may have been at play. Retail sales growth in nominal terms also surprised positively, growing by +8% y/y in November (vs. +7.2% in October), but this was mainly the result of a spike in inflation. Fixed asset investment YTD growth was stable at +5.2% y/y. State-owned firms continued to offer important support, though at a slower pace. This is in line with a relatively active fiscal policy. Monetary easing is still prudent, as reflected by the stable growth in outstanding credit in November (at +10.7% y/y). Overall, November data could suggest that the worst of the weakness may be behind us. However, the outlook remains uncertain and we wouldn’t over-read one month’s data. We expect the slowdown to continue, with China’s GDP to grow by +5.9% in 2020, after +6.2% in 2019.