Housing Slump - New South Wales

Chinese economy cools as lending and pollution brakes applied

The one-two punch from authorities to slow lending and control air pollution seems to have knocked the stuffing out of the Chinese economy last month.

Key points:

Property investment growth over the year slowed from 9.2 pc in September to 5.4pc last month as lending conditions tightened

Steel production edged up, but electricity, concrete and glass all fell

The property slowdown appears to be impacting retail sales which also in October

All three key monthly economic indicators — industrial production, fixed asset investment (FAI) and retail sales — fell significantly from September's reading, and all were below market expectations.

While infrastructure spending has helped keep the economy growing at a fairly robust 6.8 per cent this year, the slowdown in FAI — a proxy for infrastructure and property investment — suggests the tightening of the credit tap is having an impact.

Property investment grew at 5.6 per cent over the month, down from the more than 9 per cent growth in September.

Sales volumes in the real estate sector were down more than 8 per cent on this time last year, following a 5 per cent drop in September.

The net area of floor space 'starts' declined 4.4 per cent in October, after only a moderate rise in September.

This follows earlier data showing new loans issued by China's banks hit a one-year low in October.

While the size of the slowdown surprised markets, the National Bureau of Statistics was quoted by news agencies as saying, "economic growth remains in a reasonable range."

(Source: Australian Broadcasting Corporation )