Coronavirus: China’s industrial engine revved strongly in May, but consumption weak as slow recovery continues

Industrial production grew at the strongest rate since December 2019, but retail and investment remained negative, even as gradual improvement continues

Weak demand at home and abroad tempers analysts’ outlooks for China, while fears of a new outbreak in Beijing also a reminder of the fragility of economic recovery

Reading Time:3 minutes

In May, China’s industrial production, a gauge of manufacturing, mining and utilities sector activity, grew strongly, a sign of economic recovery. Photo: AP

Published: 10:03am, 15 Jun 2020Updated: 11:48am, 15 Jun 2020

China reported strong growth in its industrial engine for the month of May, as the economy continued to slowly recover from the effects of the coronavirus pandemic, data released on Monday showed.

In May, China’s industrial production, a gauge of manufacturing, mining and utilities sector activity, grew by 4.4 per cent from a year earlier, up from 3.9 per cent growth in April, but slightly below the median forecast of a Bloomberg poll of analysts, which called 5.0 per cent growth. Within that, manufacturing grew by 5.2 per cent, with mining up 1.1 per cent.

Retail sales, a key indicator of consumption in the world’s biggest consumer market, remained negative at minus 2.8 per cent growth from a year previous, but was improved on April’s 7.5 per cent slump, the National Bureau of Statistics data showed. Analysts had expected a 2.3 per cent contraction.

Fixed asset investment, the year-to-date value of spending on real estate, infrastructure and capital equipment, fell by 6.3 per cent from a year earlier in the first five months of 2020, worse than the median result of the Bloomberg poll of analysts, which predicted minus 6.0 per cent. It was also better than April’s reading of minus 10.3 per cent.

Investment in the manufacturing sector dropped 14.8 per cent in the first five months, with a 6.3 per cent drop in infrastructure investment. Property investment, however, appeared to be rebounding, with a contraction of just 0.3 per cent.