China’s Economy Expands 4.9% As Positive Economic Signs Post COVID-19 Continue

China’s economy continued to recover rapidly from the pandemic in Q3, expanding 4.9% year-on-year, adding to the positive signs around the world of numerous economies returning to growth rapidly.

The expansion in gross domestic product missed expectations but was still well ahead of a 3.2% increase in the second quarter, as the country’s industrial production drive helped stoke up the wider economy.

Industrial production was up 6.9% in September, with China emulating positive signs from other countries seen last week.

On Friday, the US Commerce Department reported that retail sales increased 1.9% in September versus the previous month, the fifth straight month of retail sales growth. That was more than double the rate of growth anticipated, with sales of clothing and sporting goods soaring despite the unemployment rate remaining elevated. The positive economic data came at the end of a mixed week for major US stock indices, which all finished marginally higher. Rising COVID-19 case numbers in the US and abroad are giving investors pause, with a “tug of war between rising concerns and encouraging economic data” according to analysts at financial advice firm Edward Jones.

Last week kicked off third-quarter corporate earnings season in the US, with the financials sector dipping by 0.9% after most of the big banks delivered their Q3 updates. While some banks’ profits were buoyed by spikes in trading and investment banking revenues, and loan loss provision were nowhere near as severe as last quarter, there is uncertainty about whether government stimulus has prevented heavy loan delinquencies from hitting entirely, or merely delayed the inevitable.

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The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all made it through the first week of Q3 corporate earnings relatively unscathed, despite an expected 20% decline in S&P 500 company earnings year-over-year (according to FactSet). US COVID-19 cases also surged back to the 60,000-a-day mark, heading back towards July’s peak levels after dropping below 35,000 in mid-September.

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