US and China data underwhelms

<p>Kia ora,</p><p>Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news of underwhelming data in the top two global economies.</p><p>First, US <a href="https://www.federalreserve.gov/releases/g17/Current/default.htm" target="_blank"><strong>industrial production fell</strong></a> September from August in a retreat the market didn't see coming. But two events crimped the result; Hurricane Ida had an outsized impact, and the chip shortage curbed car making severely. As a result, American industrial production fell -1.3% when a +0.2% gain was expected. It is a miss markets have noticed but are largely ignoring. It is still ahead +4.6% year-on-year, which is strong for them.</p><p>In China, more evidence of a sharper slowdown than expected. <a href="http://www.stats.gov.cn/tjsj/zxfb/202110/t20211018_1822960.html" target="_blank"><strong>The Chinese economy expanded at a +4.9% year-on-year pace in Q3 of 2021</strong></a>, and well below the +7.9% growth in Q2. It was also below market estimates of +5.2%. It was the slowest pace of expansion since Q3 2020, and is due to their electricity problems, widespread supply chain bottlenecks, a faltering property sector, and persistent Delta outbreaks.</p><p>And it seems likely that this is not yet at its lowest point.</p><p>But there were also improving signs in yesterday's data. <a href="http://www.stats.gov.cn/tjsj/zxfb/202110/t20211018_1822965.html" target="_blank"><strong>Retail sales</strong></a> rose +4.4% in September from a year ago, better than the weak +2.5% gain in August. But they are still miles lower than the +8% expansion they had been regular pre-pandemic. Yes, they are recovering, but still quite crimped.</p><p><a href="http://www.stats.gov.cn/tjsj/zxfb/202110/t20211018_1822966.html" target="_blank"><strong>Electricity production fell</strong></a> in September from August, but it was +4.9% higher