Covid lockdowns affect retail data and industrial production

The ongoing spread of Covid and the resulting stay-at-home orders – primarily in Shanghai – forced factories to close or operate at limited capacity in April. Pictured here on May 12, a refrigerator factory is located in Hefei, China, about a five-hour drive from Shanghai.

Xie Chen | China Optical Group | Getty Images

BEIJING – China reported a decline in retail sales and industrial production in April – much worse than analysts had expected.

Retail sales fell 11.1% in April from a year ago, more than the 6.1% predicted by a Reuters poll.

Industrial production fell 2.9% in April from a year ago, contrary to expectations for a slight increase of 0.4%.

Last month, the ongoing spread of Covid and the resulting stay-at-home orders – Primarily in Shanghai Forcing factories to close or operate with limited capacity.

“The increasingly bleak and complex international environment and greater shock than [the] The statistics office said in a statement that the COVID-19 pandemic at home clearly exceeded expectations, and new downward pressure on the economy continued to grow. The office said that the impact of Covid is temporary and that the economy is expected to stabilize and recover. “

Fixed-asset investment for the first four months of the year was up 6.8% from a year ago, slightly missing the 7% growth forecast. Investment in real estate decreased by 2.7%, investment in manufacturing increased by 12.2%, and investment in infrastructure increased by 6.5%.

Passenger car production in China Down 41.1% YoY in April, according to the China Passenger Car Association. China’s auto sector accounts for about a sixth of jobs and about 10% of retail sales, according to Official figures for the year 2018 compiled by the Ministry of Commerce.

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The unemployment rate in China’s 31 largest cities soared to a new high of 6.7% in April, according to data going back at least to 2018.

The unemployment rate across cities rose 0.3 percentage point from March to 6.1% in April. The unemployment rate among those aged 16-24 was almost three times higher at 18.2%.

To give a greater sense of the scale of the economic slowdown in April, other data showed a decline in business and household demand for loans.

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Total social finance – a broad measure of credit and liquidity – nearly halved last month from a year ago to 910.2 billion yuan ($134.07 billion), the People’s Bank of China said late Friday.

However, Macquarie’s chief China economist, Larry Hu, said he expects the drop in demand for credit to be short-term. He noted that on Sunday the central government took the “first measure… to save property” by lowering mortgage rates for first-time homebuyers.

And the rate, which used to follow the five-year base loan rate as a benchmark, is now 20 basis points lower.

“Today’s cuts are far from enough to turn the tide of the real estate sector, but more real estate easing will come,” Hu said in a note on Sunday.

Real estate and related industries account for about a quarter of China’s gross domestic product, according to Moody’s.

This is an evolving story. . Please check back for updates

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