Chinese Production Data Points to Recovery, Misses Estimates

By Gina Lee

Investing.com – Data released by China on Monday showed a continuous economic recovery in May but missed investor forecasts.

Industrial production rose 4.4% year-on-year for the month, below investor predictions of a 5% increase in forecasts prepared by Investing.com but above April’s 3.9% increase.

Retail sales fell 2.8%, below projections of a 2% drop but much better than the 7.5% drop in the previous month.

The unemployment rate fell to 5.9% from April’s 6%.

The statistics from the National Statistics Bureau indicated increasing industrial output growth alongside contracting consumption.

The Bureau’s separate statement said that “the overseas epidemic situation and the world economic situation have become more severe and complicated, and the stable operation of the

“There’s no clear sign of recovery in retail sales. It’s quite clear that production has recovered pretty nicely, but the consumption, as well as investment actually are lagging behind...so it’s the lack of demand that’s the main problem of the Chinese economy right now,” Shen Jianguang, chief economist at JD (NASDAQ:JD).com Inc., told Bloomberg.

Meanwhile, Bloomberg economists Chang Shu and David Qu warned that a new outbreak in Beijing’s Xinfadi market over the weekend could also stem the recovery, with their note saying, “The new surge in coronavirus cases raises the risk of a second wave of infections, which - depending on the public reaction and the nature of the countermeasures - could hold back the recovery. Supportive policy is likely to stay in place for an extended period. The main focus now is on making sure the stimulus gets traction.”

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