Production Maintains Resilience – November Economic Data Review

In November 2025, consumer spending decelerated further, primarily dragged down by weak auto sales and the continued decline in categories related to the "trade-in" subsidy policy after its phase-out. Sustained policy support remains crucial to boosting household consumption.

From January to November 2025, total retail sales grew by 4.0% year-on-year (YoY), down 0.3 percentage points (pcts) from the January-October period. The slowdown was driven by two key factors: 1. Auto sales declined by 1.0% YoY, worsening by 0.8 pcts compared to the previous ten months. 2. Subsidy-dependent sectors, such as furniture, saw a sharp drop in growth—falling from 9.6% to -3.8%—due to the subsidy withdrawal and sluggish property sales. Meanwhile, catering revenue remained stable at 3.3% YoY growth.

Industrial production showed resilience but diverged between traditional and new-economy sectors. The cumulative YoY growth of industrial value-added output dipped slightly by 0.1 pcts to 6.0% in November. While steel and cement production (linked to real estate) continued to contract, high-tech industries provided support: - General equipment manufacturing grew by 7.5%. - Specialized equipment manufacturing rose by 4.8%. - Computer, communication, and electronics manufacturing expanded by 9.2%.

However, weaker consumption may have dampened consumer goods production. The sales-to-output ratio for industrial enterprises fell 0.8 pcts YoY to 96.5%, with sectors like alcoholic beverages and refined tea production declining by 0.6%.

Inflation edged higher, mainly fueled by rising food prices. November’s CPI climbed 0.5 pcts to 0.7% YoY, while core CPI held steady at 1.2%. Food prices turned positive for the first time this year, up 0.2% YoY (a 3.1 pct increase from October), driven by supply disruptions from extreme weather.

Fixed-asset investment growth worsened, with declines across real estate, infrastructure, and manufacturing: - Cumulative YoY investment growth fell to -2.6%, down 0.9 pcts. - Real estate investment dropped 15.9%, worsening by 1.2 pcts. - Infrastructure investment growth slowed to 0.13%, down 1.4 pcts. - Manufacturing investment growth eased to 1.9%, down 0.8 pcts.

Property sales also weakened, with the cumulative YoY decline widening to -11.1%.

Despite recent bond market adjustments, yields may face limited upside due to: 1. Market caution ahead of pending fund sales regulations. 2. Low bond attractiveness relative to equities. 3. Potential price recovery and rebalancing risks in 2026.

For investors, strategic allocation at yield peaks is advisable, though trading opportunities remain subdued.

**Risk Factors**: Unexpected shifts in monetary/fiscal policies or global conditions.

*Disclaimer: This analysis does not constitute investment advice. Shenwan Hongyuan assumes no liability for inaccuracies or losses arising from its use.*