China's Economic Data Misses Expectations as Economy Continues to Show Uneven Recovery

Reuters economists expected China's industrial output to increase 10.9% in April, and retail sales to grow 21%.

China stocks have lost most of their gains this year. The Shenzhen Component has fallen 9.5% from its peak at the beginning of February.

China's April economic data fell short of expectations, as the economy continues to recover unevenly from the effects of the Covid restrictions.

The industrial production in April was up 5.6% compared to 10.9% as expected by the economists surveyed by Reuters. The figure had risen by 3.9% in the previous month following a

A muted start to 2019

.

Retail sales increased by 18.4%, lower than the 21% increase predicted by economists.

The increase in fixed asset investment was 4.7%, compared to expectations of a 5.5% rise. The previous reading was up 5.1%.

Winnie Wu, equity strategist at BofA Securities China, told CNBC’s “Street Signs Asia” that China is currently in a recovery stage. The numbers are positive, as we have just seen, but will the recovery be good enough to satisfy investors? That's the question.

Wu added that China's pent up demand is fading.

She said that it will take some time for income, job security and confidence to recover.

China stocks have lost most of their gains this year. The gains made this year have been largely wiped out.

Shenzhen Component

The stock market was down by 4.67% from the beginning of February to date, but only up 1.48% on a year-todate basis. It also fell 9.5% since its peak.

China's most recent data paints a mixed picture of the country's trajectory for growth.

Services remain a bright spot

The economy is still growing despite the fact that factory data fell into contractionary territory in March.

You can also find out more about the following:

Caixin China General Manufacturing Purchasing Managers' Index

In April, the reading fell below 50 for the first time in three months. The 50-point threshold separates growth and contraction.

You can also find out more about the following:

Manufacturing PMI from the National Bureau of Statistics

Also, the reading for April fell from 51.9 in March to 49.2.

Imports for the Month

Exports also rose by 8.5%, exceeding estimates.

Goldman Sachs' economist Hui Shan stated in a report published on Sunday that "Market sentiment is still very low in our conversations with clients."

She believes that the market will be more confident if there are additional measures taken by the government, rather than just a change to interest rates.

She wrote that "we are more likely to see symbolic measures to boost confidence, like RRR reductions, particularly around quarter-end, when liquidity demands are high." This is referring to the banks' reserve requirements ratio, which is the amount of money banks must hold in reserves.

Youth unemployment at record highs

The latest figures showed a youth unemployment rate of 20,4%, or the rate for those aged 16-24. The reading for April was a record-high.

Investors and many people see this as an indicator. Where is the confidence? Where is the consumer recovery coming from if the young people cannot get a job, do not have income security? Wu said.

She stated that the question of confidence is reflected in the weakened market sentiment, as well as in other high-frequency statistics such as new home sales.