Output grew 3.5% in October from the same period a year ago, official data showed on Monday, accelerating from a 3.1% increase in September. Retail sales growth also picked up.
The industrial output growth beat expectations of a 3.0% year-on-year increase in a Reuters poll of analysts, but remained the second lowest print this year.
“Economic momentum remained weak in October, with the real estate downturn weighing on industry,” said Louis Kuijs, head of Asia economics at Oxford Economics, in a note.
Retail sales rose 4.9% year-on-year in October, beating expectations for 3.5% growth and after a 4.4% increase in September.
NBS data showed property investment and sales growth continued to slow over January-October compared with the first nine months, and new construction starts measured by floor area fell.
Sentiment in China’s property market has been shaken by a deepening debt crisis, with property giant China Evergrande (3333.HK) and Kaisa Group (1638.HK) grappling with looming defaults.
“We expect policymakers to take more easing measures to prevent growth from falling too much,” said Oxford’s Kuijs, adding that weaker demand is driving the broader industry slowdown rather than just supply constraints.
Easing measures should start to have an effect early next year, he said.
Policy sources and analysts have told Reuters that China’s central bank will likely move cautiously on loosening monetary policy to bolster the economy, as slowing economic growth and soaring factory inflation fuel concerns over stagflation.
Signs of stagflation are caused by short-term factors like high international commodity prices, said Fu Linghui, an NBS spokesman, at a briefing in Beijing on Monday.
Fixed asset investment continued to slow, the NBS data showed, rising 6.1% in the first 10 months from the same period a year earlier, compared with the 6.2% increase tipped by a Reuters poll and the 7.3% rise in January-September.
“We think macro policies are close to a turning point. We expect the government will boost fiscal spending around year end to stabilize the weakening trend in investment,” said Zhang.
The more upbeat output data stood in contrast to the country’s official manufacturing survey for October. China’s official purchasing managers’ index showed factory activity declined for a second straight month in October, hurt by persistently high raw material prices and softer domestic demand.