Rising optimism in US housing; Chinese Q3 GDP expanding, but below expectations
US: NAHB housing market index (Oct.): 85 vs 83 expected (prior: 83)
- Sentiment has increased to new highs, with rising current and future sales; index has increased in all except one of the four districts.
- Low interest rates and healthy labour market continue to support the trend in housing.
China: Q3 GDP pointed to continued recovery: 4.9% y/y vs expected 5.5% (prior: 3.2% y/y).
- The economy expanded at a faster pace of 4.9% y/y (2.7% SA q/q) in Q3. This was slightly below consensus, but underlying data suggests that the recovery is becoming broader based.
- Some downside risks to our growth forecast of 2.1% for 2020, which indirectly assumes a 6.5% y/y expansion in Q4. However, better domestic demand, compounded with a favorable base effect in Q1, point to upside risks in 2021.
China: Sept. industrial production: 6.9% y/y (prior: 5.6%); retail sales: 3.3% y/y (prior: 0.5%); Fixed asset investment: 0.8% YTD y/y (prior: -0.3%)
- The supply side continued to lead the recovery in the last month of Q3, with industrial production growing at 6.9% y/y and exceeding expectations of 5.8%.
- Other activity indicators suggested that the recovery is spilling over to the demand side heading into Q4. Retail sales expanded by 3.3% y/y, exceeding expectations of 1.6%. Fixed Asset Investments entered positive territory for the first time since the COVID-19 outbreak, reaching 0.8% YTD y/y vs expectations of 0.8%.