Factory output rose in April as China’s virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, challenging the ruling Communist Party's push to revive normal activity.
Investment in factories and other fixed assets also improved as businesses reopened after China’s deepest economic slump since at least the 1960s, official data showed Friday.
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Factory output rose in April as China’s virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, challenging the ruling Communist Party's push to revive normal activity.
Friday’s report “shows only small and gradual improvements in economic activity,” Iris Pang of ING said in a report.
Factory output rose 3.9% in April from a year earlier, an improvement over the previous month’s 1.1% contraction. Manufacturers have been hurt by weak demand for exports in the United States, Europe and other major markets that have closed to fight the virus.
The scale of job losses as retailers, restaurants and export-driven factories close due to lack of demand is unclear but private sector analysts say the total could run as high as 30 million.
Exports, reported earlier, rose 3.5% in April over a year ago, rebounding from the previous month’s 13.3% contraction. But forecasters warn exporters are likely to face a second dip as foreign buyers cancel orders.
National Bureau of Statistics (in Chinese): www.stats.gov.cn
Shoppers wearing masks against the coronavirus visit a furniture mall in Beijing on Friday, May 15, 2020. Factory output rose in April as China's virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, in a sign of the challenges the ruling Communist Party faces in reviving normal activity. (AP PhotoNg Han Guan)
In this Wednesday, May 13, 2020, photo, workers inspect cars assembled at a factory for the joint venture company Beijing Benz Automotive Co., Ltd in Beijing. Factory output rose in April as China's virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, in a sign of the challenges the ruling Communist Party faces in reviving normal activity. (AP PhotoNg Han Guan)
In this Wednesday, May 13, 2020, photo, workers inspect cars assembled at a factory for the joint venture company Beijing Benz Automotive Co., Ltd in Beijing. Factory output rose in April as China's virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, in a sign of the challenges the ruling Communist Party faces in reviving normal activity.(AP PhotoNg Han Guan)
China, where the pandemic began in December, was the first economy to shut down to fight the virus and the first to start reopening in March. Automakers and some other manufacturers say production is back to normal, but retailing and other industries are struggling.
FILE - In this April 13, 2020, file photo, a worker assembles gearboxes at the Kofon factory in Huanggang in central China's Hubei province. Factory output rose in April as China’s virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, challenging the ruling Communist Party's push to revive normal activity. Investment in factories and other fixed assets also improved as businesses reopened after China’s deepest economic slump since at least the 1960s, official data showed Friday, May 15, 2020. (AP PhotoNg Han Guan)
Friday’s report “shows only small and gradual improvements in economic activity,” Iris Pang of ING said in a report.
The ruling party has handed out shopping vouchers, cut taxes and promised entrepreneurs low-interest loans after first-quarter activity shrank 6.8% from a year earlier.
Still, forecasters expect little to no economic growth this year.
Shoppers wearing masks against the coronavirus visit a furniture mall in Beijing on Friday, May 15, 2020. Factory output rose in April as China's virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, in a sign of the challenges the ruling Communist Party faces in reviving normal activity. (AP PhotoNg Han Guan)
Factory output rose 3.9% in April from a year earlier, an improvement over the previous month’s 1.1% contraction. Manufacturers have been hurt by weak demand for exports in the United States, Europe and other major markets that have closed to fight the virus.
Consumer spending, a major economic driver, shrank 7.5% from a year earlier, depressed by widespread job losses. That was an improvement on March’s 15.8% contraction but still dragged on overall growth.
Economic growth “now relies largely on domestic demand,” said Tommy Wu of Oxford Economics in a report. “Improvement in consumption momentum is likely to continue, albeit from a weak starting point.”
In this Thursday, May 14, 2020, photo, a vendor sells vegetable from a tricycle on the streets of Beijing. Factory output rose in April as China's virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, in a sign of the challenges the ruling Communist Party faces in reviving normal activity. (AP PhotoNg Han Guan)
The scale of job losses as retailers, restaurants and export-driven factories close due to lack of demand is unclear but private sector analysts say the total could run as high as 30 million.
Investment in fixed assets, the second-biggest driver of economic growth, shrank by 10.3% from a year ago but that was better than the first quarter’s 16.1% contraction.
Consumer inflation eased to 3.3% over a year ago from March’s 4.3%, but food costs surged 14.8%. That was driven by a 96.9% jump in the price of pork due to an outbreak of African swine fever that has disrupted supplies.
In this Wednesday, May 13, 2020, photo, workers assemble cars at a factory for the joint venture company Beijing Benz Automotive Co., Ltd in Beijing. Factory output rose in April as China's virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, in a sign of the challenges the ruling Communist Party faces in reviving normal activity. (AP PhotoNg Han Guan)
Exports, reported earlier, rose 3.5% in April over a year ago, rebounding from the previous month’s 13.3% contraction. But forecasters warn exporters are likely to face a second dip as foreign buyers cancel orders.
“This will become more obvious in May as global demand weakens in response to high unemployment in the U.S., UK and European economies," said ING's Pang.
April auto sales, reported this week, fell 2.6% from a year earlier, but that was better than March’s 48.4% contraction in the industry’s biggest global market.
In this Thursday, May 14, 2020, photo, vendors sell vegetable on the streets of Beijing. Factory output rose in April as China's virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, in a sign of the challenges the ruling Communist Party faces in reviving normal activity. (AP PhotoNg Han Guan)
National Bureau of Statistics (in Chinese): www.stats.gov.cn
In this Wednesday, May 13, 2020, photo, workers assemble cars at a factory for the joint venture company Beijing Benz Automotive Co., Ltd in Beijing. Factory output rose in April as China's virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, in a sign of the challenges the ruling Communist Party faces in reviving normal activity. (AP PhotoNg Han Guan)
Shoppers wearing masks against the coronavirus visit a furniture mall in Beijing on Friday, May 15, 2020. Factory output rose in April as China's virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, in a sign of the challenges the ruling Communist Party faces in reviving normal activity. (AP PhotoNg Han Guan)
In this Wednesday, May 13, 2020, photo, workers inspect cars assembled at a factory for the joint venture company Beijing Benz Automotive Co., Ltd in Beijing. Factory output rose in April as China's virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, in a sign of the challenges the ruling Communist Party faces in reviving normal activity. (AP PhotoNg Han Guan)
In this Wednesday, May 13, 2020, photo, workers inspect cars assembled at a factory for the joint venture company Beijing Benz Automotive Co., Ltd in Beijing. Factory output rose in April as China's virus-battered economy reopened but job losses depressed consumer spending, a key driver of growth, in a sign of the challenges the ruling Communist Party faces in reviving normal activity.(AP PhotoNg Han Guan)