(Yicai Global) May 17 -- The impact of the recent resurgence of Covid-19 in China is reflected in the country’s April economic data, with all main indices tumbling, but there should be an uptick in the rest of the second quarter as the outbreaks come under control and stabilizing policies take effect, a spokesperson for the National Bureau of Statistics said.

Key data for the manufacturing and service sectors plunged last month, but the latest Covid-19 waves are a short-term and external influence and there should be good growth in May and June as the situation improves and bailout policies come into effect, Fu Linghui said yesterday.

Many companies had to halt production during the prolonged lockdowns, but the economy should pick up now as the worst has passed and supportive policies are being implemented, Li Zongguang, chief economist at China Renaissance, told Yicai Global.

The added-value of industries above a designated size fell 2.9 percent in April from a year earlier, compared with 5 percent growth in March, according to the NBS’ latest figures. In the economic hub of the Yangtze River Delta Region, which comprises Shanghai and neighboring areas, the added-value of industries sank 14.1 percent and in the northeast it slid 16.9 percent.

Manufacturing in particular came under a lot of pressure as transport routes were blocked, freezing supply chains. The added-value of the manufacturing sector dropped 4.6 percent year on year, while that in the car industry plunged 31.8 percent.

Factories began to reopen from the middle of April and the fall in industrial electricity usage started to slow from the second half of the month.

Weak Spending

Consumption is still weak, and this has to do with the impact of the pandemic and how it affects people’s livelihoods and their income, said Liang Zhonghua, chief macro analyst at Haitong Securities.

Spending was suppressed due to the outbreaks, especially of non-essential goods. The total retail sales of consumer goods slumped 11.1 percent in April from the same period a year earlier, the slowest growth since April 2020, the NBS said. Retail sales of consumer goods in the economic hubs badly affected by the novel coronavirus plummeted over 30 percent. Retail sales of physical goods plunged 9.7 percent and revenue in the catering sector sank 22.7 percent nationwide.

Online sales were also affected as the latest waves interrupted trans-regional transportation routes. The growth of online retail sales sank 3.3 percentage points in April from January to 3.3 percent, the lowest since May 2020.

The proper use of fiscal policies and the issuing of consumption vouchers will get people spending again in the short term, said Wang Jun, a member of the China Chief Economist Forum.

The outbreaks are also having a big impact on the country’s employment situation. The jobless rate in the cities rose 0.3 percentage point from March to 6.1 percent. Youth unemployment, which is a big concern, climbed to 18.2 percent from March’s 16 percent.

Companies have much higher raw material and transport costs now and as a result are cutting staff, said Zhang Chenggang, director of the Research Center for China’s New Employment Patterns at the Capital University of Economics and Business.

Editor: Kim Taylor