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, reversing
a drop of 1.1% in March, data showed Friday. Fixed-asset
investment decreased 10.3% in the first four months, a smaller
decline than the 16.1% drop in the January-March period. Retail
sales slid 7.5%, more than the projected 6% drop. The surveyed
urban jobless rate, which doesn’t include all of the workforce,
rose to 6.0%, from March’s 5.9%.
The industrial improvement signaled that government
stimulus efforts are having some effect, although support
remains modest compared with China’s global peers. With
continued efforts to restore production and the gradual lift of
virus-containment measures, the back-to-work rate rose to around
95% by mid-April, up from 85% at end-March, according to a
Bloomberg Economics estimate.
Private firms’ industrial output rose 7% in April, faster
than other types of enterprises including SOEs and foreign
companies, according to the statement.
“The data is in line with the overall trend that supply is
stronger than demand and the recovery is mainly driven by
supply,” said Larry Hu, Chief China Economist at Macquarie Group
Ltd.
Government-led investment, especially infrastructure
projects and the so-called technology-focused “new
infrastructure” initiative, received an increased boost as
Beijing ramped up both policy and financial support. Private
sector investment, however, continued to contract faster than
that by the state, shrinking 13.3% in the first four months.
What Bloomberg’s Economists Say..
“The economic outlook will probably improve slightly in the
coming months as other countries exit lockdowns. Even so, China
needs to sustain — and step up — policy support, given
weakness in private-sector demand, the global downturn and some
resurgence of trade tensions with the U.S.”
Chang Shu & David Qu, Bloomberg Economics
For the full note click here
In spite of the improvement, the Chinese economy “hasn’t
returned to normal level,” Liu Aihua, a NBS spokeswoman said at
the press conference. There are “pent-up demand effects” in the
data improvement, she said.
Retail sales remained soft in April, suggesting weak
domestic demand. The retail data underscore the caution with
which the public is greeting measures to reopen the economy.
(Bloomberg)