Despite new restrictions to manage COVID-19 outbreaks and supply shortages, China's industrial output and retail sales increased faster than predicted in October, but the slowing property sector weighed on the economy's outlook.

Official figures indicated that output increased 3.5% in October compared to the same month a year ago, up from 3.1% in September. Retail sales have also increased.

The world's second-largest economy had made a strong recovery from last year's pandemic slump, but it has subsequently slowed as it deals with a slowing manufacturing sector, debt issues in the property market, and COVID-19 outbreaks.

Louis Kuijs, head of Asia economics at Oxford Economics, said, "Economic momentum remained poor in October, with the real estate downturn impacting on industry."

China's November industrial output steps up as recovery gathers pace | The Japan Times

Retail sales grew even as China implemented further restrictions to combat a new wave of COVID-19 cases in the north, the National Bureau of Statistics (NBS) reported. In October, retail sales increased 4.9% YoY, exceeding predictions of 3.5% growth and following a 4.4% gain in September.

"The rest of this year's growth would most likely be sluggish," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

"More cities have been forced to tighten travel restrictions as a result of the COVID outbreak, which will undoubtedly hurt the service industry in November. The property sector slowdown is worsening," Zhang added, describing it as "the biggest concern for the macro outlook in the coming quarters."

Property investment and sales growth slowed over January-October compared with the first nine months, according to NBS data, while new construction starts measured by floor area decreased.

A worsening debt crisis has shook sentiment in China's property industry, with property giant China Evergrande and Kaisa Group facing potential defaults.