SHANGHAI -- China's factory output increased by 0.7% in May from a year earlier, while retail sales fell less sharply, official data showed Wednesday. It gave a glimmer of hope that the world's No. The economy is rebounding from COVID 19 lockdowns.
A key business confidence gauge plunged to its lowest level in more than two years and the property market was weak as Beijing's pledge to press on with its strict coronaviruses policies weighed on sentiment.
The industrial production in China improved from April's fall of 2.9%, while the sales of consumer goods fell 6.7% in May, less than the 11.1% fall in April, according to the National Bureau of Statistics.
Lockdowns and other restrictions in major cities across China have dealt a blow to the economy as the country battled its worst virus outbreak since early in the epidemic. The measures, including a grueling two-month lockdown of Shanghai's 25 million residents, took a toll on small businesses and brought factory activity to a near standstill.
Separate data showed that China's official unemployment rate for urban areas decreased to 5.9%, an improvement from earlier 6.1%, the highest unemployment rate since early 2020.
Business confidence is low. An index published by Beijing-based CKGSB Center for Economic Research fell to 37.34, well off the 50 threshold separating confidence from pessimism and its lowest level since February 2020.
This month, China's financial capital Shanghai emerged from its lock-in and put factories back online. Beijing lifted restrictions as infections trailed off.
Both cities reversed course and tightened restrictions as cases rose again.
China's outbreaks have been small by global standards, numbering in the hundreds of daily cases nationwide.
Beijing has stuck to its zero-COVID policy, which aims to quash outbreaks at all costs, saying it saves lives and takes pressure off the health system. As many countries move towards living with respiratory illness, the increasing economic and social costs of the measures have spurred calls to relax the policy.
Economists and analysts have cut their estimates for China's economic growth this year because they doubted that it could reach a 5.5% annual target.
Fitch Ratings downgraded its growth forecast to 3.7% this year, from 4.3% before, due to the cautious pace at which pandemic-related restrictions have been eased. Andrew Fennell, agency senior director and head of greater China sovereigns, said in a research note this week that there is considerable uncertainty regarding when the authorities will pivot away from their current 'dynamic zero-COVID' policy strategy. Fitch assumes that the process won't begin until at least 2023 and will proceed at a tentative pace in the absence of official guidance.