China's activity growth to rebound

It has been six months since the bottoming out of credit growth. Past history suggests that activity growth should start to turn up now. Earlier this month, the Caixin manufacturing PMI report improved more than expected from 47.2 to 48.3, while the official reading was unchanged at 49.8. 

Hence, industrial production growth is expected to have ticked up to 5.8% yoy in October from 5.7% yoy in September. Fixed-asset investment growth should have also rebounded from the historical low of 6.8% yoy in September to about 9% yoy, possibly led by infrastructure investment. 

The housing sector remains a swing factor and the assumption is for a slow recovery in the coming quarters. Finally, nominal retail sales likely grew a tad slower at 10.8% yoy in October (vs 10.9% yoy previously). However, that would have been due entirely to softer inflation, whereas the real growth rate probably strengthened to 11.1% yoy.