(Bloomberg) -- China’s industrial output increased in April for the first time since the coronavirus outbreak, adding to early signs of a recovery that economists cautioned would be slow and challenging.
- Industrial output rose 3.9% from a year earlier, versus a median estimate of 1.5%, and reversing a drop of 1.1% in March, data showed Friday. Retail sales slid 7.5%, more than the projected 6% drop.
- Fixed-asset investment decreased 10.3% in the first four months, a smaller decline than the 16.1% drop in the January-March period. The surveyed urban jobless rate, which doesn’t include all of the workforce, rose to 6.0%, from March’s 5.9%.
Key Insights
- The industrial improvement signaled that government stimulus efforts are having some effect, although support remains modest compared with China’s global peers. The retail data underscore the caution with which the public are greeting measures to reopen the economy. The upcoming National People’s Congress that starts next week is expected to lay out the economic policy roadmap for the rest of the year.
- The sustainability of the nascent recovery is challenged by downward pressures from both home and aboard. Slumping external demand and rising unemployment, not fully reflected in official data, is likely to drag on growth.
- “The recovery so far has been largely driven by supply,” Larry Hu, Chief China Economist at Macquarie Securities Ltd in Hong Kong, wrote in a note. “It might continue for another couple of months, but the demand headwinds, especially from exports and deflation, could cause the recovery to stumble later.”
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