China - No surprises for Q3 GDP, September data beat expectations

China Macro: Real GDP growth slows to 4.6% yoy in Q3, as expected

China’s GDP figures for Q3-24 were published this morning. Annual real GDP growth slowed marginally to 4.6% yoy (Q2: 4.7%), nicely in line with our own forecast and slightly above the median consensus estimate (4.5%). This marked the weakest annual growth pace in six quarters, with headwinds from the property sector downturn still affecting confidence and domestic demand. That said, quarterly growth picked up a bit in Q3 in line with consensus expectations including ours, to 0.9% qoq s.a.. That partly reflects payback from a weak – and downwardly revised – 0.5% in Q2-2024. We expect quarterly growth to pick up further in Q4, partly reflecting the anticipated stepping up of monetary and fiscal support. We will review our GDP growth forecasts in the coming weeks, taking aboard incoming information on the size of fiscal stimulus (also see our recent China comment, More fiscal support confirmed, numbers still lacking).

September data come in stronger than expected

Meanwhile, the macro data over September generally came in better than expected, particularly retail sales and industrial production. Annual growth in retail sales rose to 3.2% yoy (August: 2.1%, consensus: 2.5%), partly supported by government subsidies –reflected in a rise in sales of home appliances and cars. On a monthly basis, retail sales picked up to 0.4% mom (August: 0.0%). Industrial production accelerated to 5.4% yoy (August: 4.5%, consensus: 4.6%) and by 0.6% mom (August: 0.3%). Fixed investment stabilised at 3.4% yoy ytd (Jan-Aug: 3.4%, consensus: 3.3%). Property sector data (investment and sales) remained deeply in contraction territory, although showed a tiny improvement compared to August. The surveyed jobless rate dropped back to 5.1% (August/consensus: 5.3%). All in all, the Chinese economy ended the third quarter on a slightly more positive note. However, we still anticipate further support will be needed and forthcoming to stabilise the property sector and domestic demand. This also reflects rising external risks, such as a broadening of trade spats with the West; these risks would rise materially should Donald Trump win the US presidential elections next month.