Growth in China’s factory output slowed for a third straight month in May.
The decline in factory output was attributed to disruptions caused by COVID-19 outbreaks in China’s southern city of Guangdong, which is a major export centre.
Retail sales and investment growth in May also came in below market expectations, but analysts say underlying activity still looks solid, noting that economic readings remain distorted by comparisons to the pandemic plunge seen in early 2020.
The Chinese economy has largely shaken off its pandemic slump, but officials warn that its recovery remains uneven amid challenges including soft domestic demand, rising raw material prices and global supply chain disruptions.
Chinese industrial production rose 8.8% in May from a year ago, slower than a 9.8% uptick in April and missing a 9.0% rise forecast by analysts. In particular, the output of automotive vehicles fell 4% from a year earlier, compared with an increase of 6.8% seen in April.
Most analysts had expected some moderation in China’s May output due to softer export orders, higher input costs for factories, and tighter environmental restrictions on heavy industry.
Outbreaks of COVID-19 in the Pearl River Delta since late May also have brought some key Chinese ports to a standstill, although the government has said it believes the infections can be contained.
Retail sales in China rose 12.4% year-over-year in May, weaker than 13.6% growth expected by analysts and down from 17.7% in April. Two-year average growth for retail sales stood at 4.5% in May, faster than the 4.3% in April, in a sign that sales are gradually recovering.
China's unemployment rate in May also continued to drop. The country’s urban jobless rate fell to 5.0%, its lowest level since May 2019. Surging commodities prices pushed China’s producer inflation to its highest level in over 12 years, squeezing profit margins for mid- and downstream firms.
