(Bloomberg) -- China’s industrial production unexpectedly increased in May, while consumer spending continued to fall as Covid restrictions weighed on sentiment.
Industrial output rose 0.7% in May from a year ago, reversing from a drop of 2.9% in April, data from the National Bureau of Statistics showed Wednesday. The median estimate in a Bloomberg survey of economists was for a contraction of 0.9%.
Retail sales slid 6.7% in the period, less than the 7.1% projected decline and better than April’s 11.1% plunge. Fixed-asset investment grew 6.2% in the first five months of the year. The surveyed jobless rate fell to 5.9%.
Some Covid restrictions in Shanghai were eased during the month, allowing factories to gradually resume production and logistics bottlenecks to ease. However, regular virus testing and other stringent controls continued to hinder consumer activity.
With outbreaks continuing to pop up in Shanghai and Beijing and curbs being reinstated to bring infections under control, the outlook for the economy’s recovery is uncertain. Last month’s somewhat subdued activity and signs of a weak recovery in June will weigh on growth add put the government’s full-year target of around 5.5% further out of reach.
So far, Beijing’s stimulus has largely targeted businesses, with limited relief for consumers facing job losses and sliding incomes. The government last month rolled out a package of policies, including more tax breaks and loans for infrastructure projects. The People’s Bank of China, meanwhile, kept a key policy interest rate unchanged earlier Wednesday. It last reduced that rate in January.
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