A Dive Into China’s GDP Details Shows Recovery Broadening Out

China’s economic recovery from the pandemic slump is broadening out, with data on Monday showing stronger growth in manufacturing and consumer spending. Here’s a look behind the headline numbers to see whether the rebound can be sustained:

Missed Estimates

Gross domestic product climbed 4.9% in the third quarter from a year ago, faster than the previous quarter’s 3.2% expansion, but missing the 5.5% gain forecast by economists surveyed by Bloomberg.

The economy expanded 0.7% in the year to date, meaning that the world’s second-largest economy regained all the ground it lost in the first half.

While industrial sectors are still leading the recovery, consumers have finally started to catch up. Retail sales growth accelerated to 3.3% in September, well above the 1.6% median estimate in a Bloomberg survey of economists. An unexpected surge in vehicle sales definitely helped, but even excluding that, retail sales were up 2.4% from a year ago. Restaurants continue to register declines from a year ago, but improved to -2.9%. With the virus largely under control, and evidence of robust spending through the recent Golden Week holidays, the data suggest consumers are starting to open their wallets again. Still, there’s a lot of ground to make up, with retail sales down 7.2% in the nine months through September from the same period last year.

Property Gain

Property investment outperformed, expanding 5.6% in the nine months through September from the same period in 2019, even as the Chinese government tightened its grip on the sector with new measures that state-run media have called the “three red lines.” While the real estate sector has been a support to economic growth, there are worries about rising indebtedness. That’s been made clear recently by property developer China Evergrande Group, which faced a possible cash crunch last month.