Chinese economy stumbled in April

Covid lockdowns and the resulting uncertainty and supply-chain disruptions caused China’s key economic indicators to plummet in April. The National Bureau of Statistics reports that the value of retail sales went down by 11 % y-o-y last month, or at least 13 % in real terms. Value of catering service sales shrank by 23 % y-o-y, while car sales were down by 32 %. Retail sales have underperformed the rest of the economy throughout the pandemic. Based on month-on-month NBS growth figures, the volume of retail sales last month seems to be around the same level as it was three years ago.

Led by a decrease in manufacturing activity (down 5 %), industrial output contracted by 3 % y-o-y in April. NBS figures show that industrial output plunged from March, but still the level of output was roughly 18 % higher than three years ago. The decline in construction and sales of real estate became steeper in April. New building starts, measured in terms of floorspace, fell by 44 % y-o-y, while real estate sales fell by 39 %.

Foreign demand also slowed down last month. The value of China’s goods exports (in US dollars) rose by 4 % y-o-y, while the value of imports was up by 1 %. Last year the value of China’s foreign trade rose by 30 %. The value of exports to Russia in April fell by 26 % y-o-y (down by 8 % in March). The value of imports from Russia still rose by 57 % y-o-y, however, reflecting soaring global prices for energy and other commodities.

The unemployment rate, which is based on urban surveys, climbed to 6.1 % in April. The unemployment rate in China has risen since last autumn when it stood at 4.9 %. China’s unemployment figures, however, do not necessarily give a clear picture of labour market conditions. Data from official survey show an unusually stable unemployment rate in the range of slightly under 5 % to just over 6 % throughout its entire history. Youth unemployment (16 to 24 year-olds), however, has climbed recently and reached 18.2 % in April according to official survey figures.

Industrial output and electricity production growth turned negative in April; retail and housing sales contracted further

Sources: China National Bureau of Statistics, CEIC and BOFIT.