China's industrial output, retail sales in May beat expectations, but 'difficulties and challenges' remain
Updated 15:14, 15-Jun-2022
Yantian Port, a major foreign-trade port in Shenzhen, south China's Guangdong Province. /CFP

Yantian Port, a major foreign-trade port in Shenzhen, south China's Guangdong Province. /CFP

China's major economic indicators for May improved marginally and beat market expectations, with signs of good recovery momentum and that the negative effects of the COVID-19 pandemic are being gradually overcome, according to the National Bureau of Statistics (NBS).

The country's industrial output increased 0.7 percent year on year in May, picking up from a decline of 2.9 percent in April, NBS data showed on Wednesday. The reading beat Reuters' expectation of a 0.7-percent drop.

The NBS data also showed that retail sales last month shrank 6.7 percent from a year ago, less than the expected 7.1-percent decline by Reuters. In April, the figure slumped 11.1 percent from a year earlier.

Fixed asset investment rose 6.2 percent year on year in the first five months, compared with growth of 6.8 percent in January-April, according to the NBS. It was above a gain of 6 percent expected by Reuters.

"As expected, growth of activity indicators broadly improved from April," Lu Ting, chief China economist of Nomura said, attributing the improvement to the easing of COVID-19 control measures in some regions in late May.

China's exports rebounded and grew at a double-digit pace in May, shattering expectations and adding to signs that China's economy is recovering from COVID-19 outbreaks as factories restarted and logistics snags eased in Shanghai, customs data showed last week.

The country's exports rose 16.9 percent in May year on year in dollar terms, accelerating from April's 3.9-percent increase, according to the General Administration of Customs. It was the fastest growth since January and beat the Reuters forecast of an 8-percent gain.

Dollar-denominated imports also expanded for the first time in three months, rising 4.1 percent in May from a year ago and above the flat growth in April and Reuters' expectation of a 2-percent increase.

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China's exports surge to double-digit pace in May, beat forecast

The economy "showed a good momentum of recovery" in May, "with negative effects from COVID-19 pandemic gradually overcome and major indicators improved marginally," the NBS said in a statement.

"However, we must be aware that the international environment is to be even more complicated and grim, and the domestic economy is still facing difficulties and challenges for recovery," the agency said.

NBS data showed that the surveyed urban unemployment rate lowered to 5.9 percent in May from 6.1 percent in April, while the unemployment rate for people aged between 25 and 59, the majority of the labor market, stood at 5.1 percent.

"Growth has bottomed, the recovery just started," Robin Xing, Morgan Stanley's chief China economist, was quoted as saying by Bloomberg. "It's still a very incomplete and bumpy recovery, but we have seen the worst."

The economy is expected to improve further in June and achieve "reasonable" growth in the second quarter if COVID-19 outbreaks are controlled, Fu Linghui, a spokesman for the NBS, told a press conference on Wednesday.

The People's Bank of China on Wednesday left its key policy interest rates unchanged after lowering benchmark lending rates in May to prop up the economy. The rate on the one-year medium-term lending facility was kept unchanged at 2.85 percent, in line with most forecasts.

Chinese stocks performed best in Asia on Wednesday, with the benchmark CSI 300 Index going up 1.8 percent before the lunch break and climbing further over 2.6 percent as of 2:00 p.m. Beijing Time.

(With input from agencies)

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