(Yicai Global) June 15 -- China's economy is likely to improve further in June and reasonable growth in the second quarter can be expected as the Covid-19 outbreaks fall under control and growth-stabilization policies come into effect, a spokesperson for the National Bureau of Statistics said today.

There was already a notable advance in May’s figures, released by the NBS today. The added value of industrial enterprises above a designated size nudged up 0.7 percent from the same period last year, much more than the average forecast of 0.49 percent by an Yicai Global poll of chief economists, and a big improvement on April’s 2.9 percent plunge.

The economic indicator, which measures the contribution of large industries to the gross domestic product, returned to positive territory in May as businesses in Shanghai get back to work after a two-month lockdown, logistics improve and fewer places have Covid-19 outbreaks, said Lu Zhengwei, chief economist at China Industrial Bank.

The total retail sales of consumer goods slumped 6.7 percent in May from the year before, but still did better than the average prediction of a 7.06 percent dive by the Yicai Global poll, and narrowed April’s slump by 4.4 percentage points.

Consumer spending in May remained weak, Zheng Houcheng, director of Yingda Securities' research institute, told Yicai Global. This is due to the impact of the Covid-19 flare-ups on people’s incomes and the high levels of urban unemployment, now at 5.9 percent.

More policies to boost employment and increase incomes are needed, said Shen Jianguang, chief economist at e-commerce giant JD.com. For example, the government should increase direct allowances to vulnerable groups and vendors to stabilize employment and income levels.

Infrastructure investment is proving to be a new growth driver, surging 6.7 percent in the five months ended May 31 from the same period last year. This is a rate 0.2 percentage point higher than the first four months.

Fixed-asset investment jumped 6.2 percent from January to May to CNY20.6 trillion (3.07 trillion), again more than the 5.61 percent forecast by the Yicai Global survey, but a slowdown from the 6.8 percent gain over the first four months.

Infrastructure investment may continue to bounce back over the next several months but given that there are still several factors hampering such a rebound, the recovery may be limited, said Wu Chaoming, deputy director of Chasing Securities’ Chasing Institute. Infrastructure investment growth over the whole year is likely to be around 8 percent, he added.

Editors: Xu Wei, Kim Taylor