Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. Roaring exports lifted China’s economic growth in the third quarter despite lacklustre consumer spending, which lagged far behind factory output. The country’s GDP grew by 4.5% year on year between June and September, better than economists had expected and up from the second quarter’s 4.3%.
The economy grew by 4.6% in the first nine months of the year, putting it on track to hit the government’s 2026 target of 4.5% to 5% growth without extra stimulus measures. Industrial production rose 5.5% in September, up from 5.2%, while retail sales increased 1.1%, up from 0.4%. However, fixed-asset investment fell 7.2% over the first nine months, property investment tumbled by 20.6%, and infrastructure spending remained weak.
The headline GDP number tells you the economy is still moving forward; the internals tell you the factory floor is doing most of the running while households, property and investment are still somewhere behind looking for their shoes. Contracting fixed investment and another deep property decline leaves the domestic economy badly out of step with the factory sector. The semiconductor boom is increasingly a price story rather than a volume story… Beijing now has less urgency to ease aggressively, but unless local demand catches up, China remains dependent on the rest of the world absorbing what its factories produce, bringing the trade imbalance increasingly into view.
In Asian stock markets, Japan’s Nikkei fell 0.6% while China’s CSI 300 rose 0.2%, Hong Kong’s Hang Seng climbed 0.5% and South Korea’s Kospi added 1.5%. Increasingly violent street protests in France have put pressure on the euro, while French bonds sold off, pushing yields higher, ahead of a bond auction later in the day. The yield, or interest rate, on the 10-year French government bond rose more than 6 basis points to 4.842%.
The European single currency dipped 0.2% to $1.1218 versus the dollar. The spread between 10-year German and French government bonds has widened by 6.5 basis points, indicating the premium investors pay for French debt over what is considered ultra-safe German debt. 1.30pm BST: Canada inflation for September
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