Economic activity undershoots expectations in November

Latest reading: Industrial output grew by 4.8% year on year in November, marginally slower than the 4.9% pace recorded a month earlier and undershooting expectations of 5.0%. This represented the weakest expansion since August 2024, reflecting more modest gains in manufacturing as well as in electricity, heat, gas, and water supply. Retail sales increased 1.3% year on year in November, down from October’s reading and well below forecasts of 2.9%. This was the slowest annual growth since December 2022 and hints at the fading impact of consumer subsidy measures. Fixed-asset investment declined 2.6% year on year over the January–November period, exceeding expectations of a 2.3% fall and following a 1.7% contraction in the first ten months. The downturn extended to a third consecutive month and was the steepest since June 2020, driven by persistent weakness in property and infrastructure spending and more subdued manufacturing growth.

Panelist insight: On the data, Nomura analysts said: “The sharp decline of retail sales growth, the deep contraction of FAI growth and the deterioration of the property sector so far are fully consistent with our mid-year forecast of a demand cliff in H2 2025. Today’s data lend support to our below-consensus forecast for Q4 GDP growth of 4.3% y-o-y.” On retail sales, ING’s Lynn Song said: “The trade-in policy is turning from a tailwind to a headwind. The most obvious example is in household appliances, which saw a -19.4% YoY contraction in November, bringing the year-to-date growth down sharply to 14.9%. Recall that the trade-in policy for household appliances ramped up significantly in the fourth quarter of 2024. This resulted in a wave of purchases, something for which the YoY data is now paying the price. The same impact will likely be observed at the start of 2026 for the communication appliance category.”

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