(Yicai Global) Nov. 16 -- China's consumption and factory activity both slowed in October as recurring outbreaks of Covid-19 suppress market demand. But investment in infrastructure stayed high due to strong policy support and remains a stable growth point, according to the latest data.

China’s total retail sales of consumer goods fell for the first time in five months in October as consumption sagged, according to data published by the National Bureau of Statistics yesterday. Retail sales of consumer goods dipped 0.5 percent from the same period last year, and the growth rate slowed by 3 percentage points from the previous month.

While the country’s industrial output gained 5 percent last month from a year earlier, slowing from a six-month peak of 6.3 percent in September.

The October data shows the impact of close contact consumption, such as in restaurants, due to the outbreaks, said NBS spokesperson Fu Linghui. Restaurant revenue tumbled 8.1 percent in October from a year ago.

However, investment remains upbeat, Fu said. In the first ten months, investment in new construction projects soared 23.1 percent from the same period last year and the growth rate has been accelerating for two consecutive months.

Investment in infrastructure jumped 8.7 percent, marking the sixth straight month of growth, while fixed-asset investment expanded 5.8 percent in the first ten months year on year, slowing slightly from January to September’s 5.9 percent growth, the NBS said.

Steady growth in investment will keep playing a key role in stabilizing the economy and optimizing the supply structure, Fu said.

The Chinese economy withstood numerous unexpected fallouts both at home and abroad in October and overall has maintained an upward trend, Fu said. The international environment has become more complex and severe and the foundation for domestic recovery is not yet solid, he added.

The impact of the pandemic on the market is short-term and external, Fu said, stressing that China still has many favorable conditions for a recovery in consumption.

The recent flare-ups of Covid-19 have been scattered, widespread and frequent, resulting in slower income growth which in turn has put a dampener on spending and made consumption expectations more conservative, Pang Ming, chief economist and director of research at US commercial real estate services firm Jones Lang LaSalle’s China arm, told Yicai Global.

However, consumption is expected to recover as epidemic prevention and control measures are further optimized and more promotions go on offer, Pang said.

China's economy continued to recover in October, but it will still face challenges at home as well as in the highly complex global situation, so follow-up policies should focus on demand and expectations, Pang said.

Editor: Kim Taylor