China Economic Data Beats Across The Board In Apparent ZeroCOVID Policy 'Victory Lap'

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by Tyler Durden
Wednesday, Jun 15, 2022 - 02:23 AM

In what appears like a victory lap of data showing their ZeroCOVID policy worked, every data item in tonight's China economic deluge beat expectations in May.

While China remains the most 'locked down' nation in the world, and Shanghai faces re-lockdowns, May did see Goldman's 'Effective Lockdown Index' fall for the communist nation...

While all the economic signals did deteriorate in May (except unemployment), they also all beat expectations...

Retail sales fall less than expected and there’s a tick higher in investment. Industrial output notably stronger, reflecting the easing of restrictions, and the surveyed jobless rate fell to 5.9%

  • China Industrial Production YTD YoY BEAT: +3.3% vs +3.1% exp but WORSE from +4.0% prior

  • China Retail Sales YTD YoY BEAT: -1.5% vs -1.7% exp but WORSE from -0.2% prior

  • China Fixed Asset Investment YTD YoY BEAT: +6.2% YoY vs +6.0% exp but WORSE from +6.8% prior

  • China Property Investment YTD YoY BEAT: -4.0% vs -4.4% exp but WORSE from -2.7% prior

  • Surveyed Jobless Rate BEAT: 5.9% vs 6.1% exp and BETTER than 6.1% prior

Under the hood of today's labor market improvements, the situation is 'varied' we suggest rather charitably:

  • Surveyed unemployment rate of the population aged from 16 to 24 was 18.4%

  • Jobless rate of those aged from 25 to 59 was at 5.1% percent

  • Urban surveyed unemployment rate in 31 major cities was 6.9%

Looking through the retail sales data, there were big drops for clothing, cosmetics, jewelry, electronics, furniture, automobiles and more. Beverages, tobacco, alcohol and petroleum (probably reflecting oil prices) were among the gainers.

Simply put, today’s data provides prima facie evidence that the Chinese economy hit a bottom in April and is now slowly on the mend - Mission Accomplished Beijing?

However, not wanting to steal the jam from China's donut too much, despite industrial output rebounding to growth territory, apparent oil demand - a leading indicator - widened its decline to 8.3%YoY in May, suggesting that more bad news is ahead in the coming months.

As Bloomberg notes, even the NBS is hinting at caution: "We must be aware that the international environment is to be even more complicated and grim, and the domestic economy is still facing difficulties and challenges for recovery.”