Chinese investment data for October point to stabilisation

The latest macroeconomic data out of China pointed to fiscal stimulus from Beijing gaining some traction in supporting economic activity, according to one economist, although some analysts were more cautious.

Industrial production slipped to a 5.6% year-on-year clip in October from 5.7% in the month before (consensus: 5.8%), according to the country's statistics bureau.

However, the weakness largely reflected slower activity in mining due to the drop in commodity prices, according to Capital Economics's Julian Evans-Pritchard.

Factory output on the other hand held at 6.7% year-on-year, although growth in both electricty and output - proxies for heavy manufacturing - eased. Here, again, industrial sales for export picked up, in constrast to recent weak readings for Chinese exports.

"Overall, the data suggest that activity in industry remains subdued but broadly stable," Evans-Pritchard said in a research report sent to clients.

Fixed asset investment expanded at a 10.2% year-on-year clip in the first ten months of the year, in line with analysts' forecasts, albeit one tenth of a percentage point less than had been expected.

Even so, in month-on-month terms the FAI numbers pointed to an acceleration to a 9.5% pace from 6.8% year-on-year in September, the think-tank said - the biggest jump since mid-2012, the economist said.

That is "a sign that stronger fiscal outlays are starting to help shore up infrastructure spending."

Consumption also "held up well", with the rate of growth in retail sales growth moving up from 10.9% year-on-year to a ten-month high of 11.0% (consensus: 10.9%).

Weakness in the most recent readings on exports and inflation have been overplayed and September's FX reserves figures show capital outflows have been stemmed "markedly", Evans-Pritchard believed.

"Retail sales for October only rose 11%, which was only slightly up from September’s 10.9%, which is a little disappointing when you consider the various stories surrounding last month’s holiday week," said Michael Hewson, chief market analyst at CMC Markets UK.