China’s factory, retail sectors skid for Covid

China's economy lost more steam in November as factory output slowed and retail sales extended declines, both missing forecasts and clocking their worst readings in six months, hobbled by surging COVID-19 cases and widespread virus curbs.

The data suggested a further deterioration in economic conditions as lockdowns in many cities, a property-sector crunch and weakening global demand pointed to a bumpy road ahead even as Beijing ditched some of the world's toughest anti-virus restrictions following widespread and rare public protests.

Industrial output rose 2.2 per cent in November from a year earlier, missing expectations for a 3.6 per cent gain in a Reuters poll and slowing significantly from the 5.0 per cent growth seen in October, the National Bureau of Statistics (NBS) data showed on Thursday. It marked the slowest growth since May, partly due to disruptions in key manufacturing hubs Guangzhou and Zhengzhou.

Retail sales fell 5.9 per cent amid broad-based weakness in the services sector, also the biggest contraction since May. Analysts had expected the gauge of consumption to shrink 3.7 per cent, accelerating from a 0.5 per cent dip in October.

In particular, sales in the contact-intensive catering sector fell 8.4 per cent from a year earlier, accelerating from the 8.1 per cent decline in October.

Meanwhile, automobile production slumped 9.9 per cent, swinging from an 8.6 per cent gain in October.

China's yuan eased against the dollar on Thursday, as the data hit investor confidence.

"The weak activity data suggest that the policy needs to be eased further to revive the growth momentum," said Hao Zhou, chief economist at GTJAI.

"The increased size of the MLF rollover this morning is in line with the overall easing policy tones. Looking ahead, we also forecast that the rates for MLF will be lowered by 10bps next Q1."

China's central bank ramped up cash injections into the banking system on Thursday and held interest rates on the medium-term policy loans, or MLF, to keep liquidity conditions ample.

The world's second-largest economy has been depressed by its zero-COVID policy, as tight movement controls hampered consumption and production. Other headwinds the country faces are its property slump, global recession risks and geopolitical uncertainties.

Property investment fell 19.9 per cent year-on-year, the fastest pace since the statistics bureau began compiling data in 2000, according to Reuters calculations based on data from the NBS.

Policymakers have rolled out support for the sector on almost all fronts, including credit lines from banks, bond financing and equity financing, but analysts said such effects have yet to be seen as home sales still remained weak.

Fixed asset investment expanded 5.3 per cent in the first 11 months of the year, versus expectations for a 5.6 per cent rise and growth of 5.8 per cent in January-October.

Hiring remained low among companies wary about their finances. The nationwide jobless rate rose to 5.7 per cent in November from 5.5 per cent in October. Youth unemployment dipped to 17.1 per cent from 17.9 per cent in October.