China GDP / UK CPI

Official data from China’s National Bureau of Statistics showed the world’s second-largest economy’s GDP grew by 5.2% in 2023, less than the 5.3% economists were going for, however, exceeding Beijing’s 5% “growth target” for the year. The 5.2% growth is a far cry from the 3% seen in 2022, but still lower than the pre-pandemic annualised GDP of 6% in 2019. 

The largest drag on growth is still the property sector, which makes up 20% of the economy, as prices fell the most in almost a decade in December. Prices for new homes in 70 cities, excluding subsidised housing, dropped 0.45% last month from November, the biggest drop since Bond was back in Spectre.  

The market for second-hand homes did not fare much better, with prices down nearly 0.8%, the same pace as the previous month. However, on the brighter side, industrial output expanded 4.6% last year, above the 4.5% consensus and 4.3% previous, with fixed-asset investment climbing 3% for the full year, better than a predicted 2.9% rise.   

The statistics bureau has also resumed reporting figures on youth unemployment after “tweaking their methodology”. The youth jobless rate was 14.9% in December for those aged between 16 and 24. That figure excluded students and compares to the 21.3% in June before the body suspended releasing this data.   

Here in the UK, the Office for National Statistics said inflation unexpectedly rose in December for the first time in 10 months, coming in at 0.4%, up from -0.2% in the previous month, and above the 0.2% consensus. The yearly CPI was 4%, again 0.2% above forecast and 3.9% previously. Core was also stronger at 5.1%, versus the 4.9% predicted. 

It was service inflation that really caught the eye. This excludes airfares, package holidays and education and the one the Old Lady officials are watching for signs of underlying pressures on prices. This came in at 6.4%, well above the 6.1% consensus and the 6.3% previous. However, this is still down from a peak of 7.5% in May 2023. 

On the back of the figures, there was a slight repricing in the futures market on the timing of the first rate cut, with the market now pricing a 50% chance of the first cut in May, and only an 11% chance of that happening in March, at time of writing, of course.