China: Negative data on unemployment, industrial production, retail sales due to coronavirus

Factory activity and retail sales in China plummeted in April as coronavirus restrictions kept workers and consumers at home and caused severe supply chain problems, overshadowing the outlook for the world’s second-largest economy.

Restrictions imposed on major cities across the country in March and April, including Shanghai, hit production and consumption and increased risks for those parts of the world economy that are heavily dependent on China.

Retail sales fell 11.1% from a year earlier, the biggest drop since March 2020, and higher than expected.

Factory output fell 2.9 percent from a year earlier, shattering expectations of a rise and the biggest drop since February 2020 as anti-coronary measures hit supply chains and paralyzed distribution.

Analysts now expect the recession in China to be more difficult to combat than the pandemic caused by the 2020 pandemic, with exports unlikely to move higher and policymakers limited to options for boosting the economy.

“The result is that while we hope the worst is over, we believe that China’s economy will find it difficult to return to pre-pandemic levels,” analysts said.

Industrial production around the region, which includes Shanghai, fell 14.1% in April, while that in NW China fell 16.9%.

The data also showed a drop of 47.6% in car sales, as the car industry cut production amid empty exhibitions and shortages of spare parts.

The coronavirus crisis is also reflected in the labor market, which is now a key priority for Beijing to maintain economic and social stability.

The unemployment rate rose to 6.1% in April, the highest level since February 2020 and higher than the government’s target for 2022, at 5.5%.