China youth unemployment hits record 20.8% as economy slows further in May
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The unemployment rate for Chinese between the ages of 16 and 24 rose to 20.8 per cent, up from what was already a record 20.4 per cent in April.
PHOTO: EPA-EFE
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Beijing – China’s economy stumbled in May with unemployment among youth
The economic rebound seen earlier in 2023 has lost momentum in the second quarter, prompting China’s central bank this week to cut some key interest rates, with expectations of more to come.
The labour market remained weak amid broad-based economic fragility.
The unemployment rate for Chinese between the ages of 16 and 24 rose to 20.8 per cent, up from what was already a record 20.4 per cent in April, the National Bureau of Statistics (NBS) said.
Overall urban unemployment remained at 5.2 per cent, it said.
Industrial output grew 3.5 per cent in May from a year earlier, slower than the 5.6 per cent expansion in April and slightly below a 3.6 per cent increase expected by analysts in a Reuters poll, as manufacturers struggle with weak demand both at home and abroad.
Retail sales – a key gauge of consumer confidence – rose 12.7 per cent, missing forecasts of 13.6 per cent growth and slowing from April’s 18.4 per cent.
“All the data points so far sent consistent signals that the economic momentum is weakening,” said Mr Zhang Zhiwei, president of Pinpoint Asset Management.
Data ranging from factory surveys and trade to loan growth and home sales has shown signs of weakness for the world’s second-biggest economy.
The soft run of data has defied analyst expectations for a sharper pickup, given comparisons with 2022’s very weak performance, when many cities were under strict Covid-19 lockdowns.
The figures also reinforce the case for more stimulus as China faces deflationary risks, mounting local government debts, record youth unemployment and weakening global demand.
“Insufficient domestic demand and sluggish external demand could interrupt the momentum in the ongoing months, leaving China with a more gradual U-shape recovery trajectory on its month-on-month growth path,” said Mr Bruce Pang, chief economist at Jones Lang LaSalle.
Introducing stimulus with large-scale policy easing would be the first step, Mr Pang said. “But it could need two to three years to shore up a slowing economic recovery.”
China’s central bank on Thursday cut the interest rate on its one-year medium-term lending facility rate
While policymakers in Beijing have been cautious about deploying aggressive stimulus that could heighten capital flight risks, analysts say more easing will be needed.
The country’s biggest banks recently cut their deposit rates to ease pressure on profit margins and encourage savers to spend more.
Mr Julian Evans-Pritchard, head of China at Capital Economics, said that while the central bank’s easing will not make much difference on its own, it reveals “growing concerns among officials about the health of China’s recovery”.
He added that the second quarter is shaping up to be weaker than he had anticipated, and further policy support is probably needed to prevent the economy from entering a renewed downturn.
Markets are also betting on more stimulus, including measures targeting the floundering property sector.
Property investment in May fell at the fastest pace since at least 2001, down 21.5 per cent year on year, while new home price growth slowed.
The property sector, historically a major driver of China’s economic growth, is expected to grapple with “persistent weakness” for years, Goldman Sachs analysts said this week. REUTERS
