Policy easing eyed as economic activity remains sluggish

BEIJING - A raft of weaker-than-expected economic indicators released Thursday highlighted downward pressures for China's economy and prompted analysts to eye further easing policies in the near term.

The National Bureau of Statistics (NBS) said in a statement that China's industrial output grew 7.7 percent year on year in October, down from an 8-percent increase in September.

The October pace was 0.3 percentage points lower than the market consensus projection, marking the second lowest monthly reading since April 2009 after August 2014.

For the first 10 months, industrial-production growth decelerated to 8.4 percent year on year, down 0.1 percentage points from the first nine months of 2014, the NBS said.

China uses industrial production, officially called industrial value added, to measure business activities of designated large enterprises that have annual turnover of at least 20 million yuan ($3.25 million).

Industrial production accounted for 44.2 percent of China's total GDP in the first nine months of 2014, making it one of the best leading indicators for China's GDP growth.

NBS's new data also shows that fixed asset investment continued to dip in the first 10 months, affected by a cooling property sector and weak domestic demand, and retail sales growth retreated for a fifth-straight month in October.

Analyst at the China International Capital Corp (CICC), Bob Liu, said the weaker-than-expected data served as evidence that downward pressures on growth still existed.

Industrial output is likely to slow further in November because of restrictions placed on factories and construction in Beijing and neighboring regions to keep the air clean during the Asia-Pacific Economic Cooperation (APEC) meetings, which ended on Nov 11.

"Industrial production growth moderated, as the one-off boost from faster electronic output [i.e., communication equipment] faded. Otherwise, the downward pressures on the industrial sector persisted," according to a note from HSBC's research team headed by Qu Hongbin, the institution's chief China economist.

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