China - Q3 GDP and September data confirm bottoming out

China Macro: Quarterly GDP growth picks up in Q3

China’s Q3 GDP data published this morning came in a bit better than consensus expectations, but were closer to ours. Despite signs of distress in the property sector over the summer, with contagion to local government financing vehicles and some financial institutions, real GDP growth accelerated to 1.3% qoq in Q3 (consensus: 0.9%, ABN AMRO: 1.0%), up from a downwardly revised 0.5% in Q2 (old: 0.8%). This reflects improvements at both the supply and the demand side (see below). In annual terms, real GDP slowed from 6.3% yoy in Q2 to 4.9% in Q3 (consensus: 4.5%, ABN AMRO: 4.7%), but that mainly reflects a base effect from last year. In Q3-2022, China’s economy showed a strong rebound (+3.7% qoq) from the sharp dip in Q2-2022 following the broad Omicron-related lockdowns. The latest GDP data confirm that the government’s growth target of 5% for 2023 is within reach. We will review our growth forecasts following the latest GDP data (currently 5.2% for 2023 and 4.8% for 2024) and publish changes, if any, in our upcoming October Global Monthly.

September activity data: Property sector weakness continues

The macro data for September also pointed to a stabilisation of the Chinese economy, following earlier improvements in August and a ‘cyclical trough’ in July. The biggest positive surprise came from retail sales, which accelerated to 5.5% yoy (August: 4.6%, consensus: 4.9%), with catering services up 13.8% yoy in September. Growth of industrial production was unchanged compared to August, at 4.5% yoy (consensus: 4.4%). We should add that in monthly (s.a.) terms, both retail sales and industrial production slowed compared to August. Fixed asset investment slowed marginally to 3.1% in January-September (Jan-Aug: 3.2%, consensus: 3.2%). Another positive surprise came from the surveyed unemployment rate in urban areas, which fell to a two-year low of 5.0% (August/ consensus: 5.2%). Despite the overall improvements in the macro data, property-related data remained weak, with annual growth of both residential property sales and property investment falling deeper into contraction territory. Bloomberg’s monthly GDP estimate for September was stable compared to August, at 5.9% yoy (July: 5.2%).