Following Friday's catastrophic new credit data, which saw the fewest new loans in half a decade, and after this morning's report that Chinese authorities allowed a further cut in mortgage loan interest rates for first-time homebuyers in another push to prop up its property market and revive a flagging engine of the world's second-largest economy, few expected any upside surprises from Monday's economic data dump out of China, but even fewer expected anything quite as bad as what Beijing just reported.
With Europe, UK and the US all on the verge of recession, China just boldly took the step to get there ahead of everyone, with Beijing reporting that China's economy contracted sharply in April, as Covid outbreaks and lockdowns dragging the industrial and consumer sectors down to the weakest levels since early 2020 as millions of residents were confined to their homes and factories were forced to halt production, while the local unemployment rate soared to the 2nd highest level in modern history.
The unemployment rate climbed to 6.1%, higher than the forecast of 6%, and just shy of the 6.2% unemployment rate hit in Feb 2020 during the peak of the covid crisis.
The good news is that the shockingly bad economic data is the direct result of Beijing's Zero Covid policy, which has taken a huge economic toll from the government's efforts to keep the virus at bay.
We say "Good" news because as the following chart shows, at this rate, Covid will soon no longer be a factor in China.
"With progress in Covid controls and policies to stabilize the economy taking effect, the economy is likely to recover gradually."
In kneejerk reaction to the latest dismal news out of China, US futures slumped to session lows, dropping below 3,990 after earlier rising as high as 4,042 with China's benchmark CSI 300 stock index down 0.3% after earlier rising as much as 0.7%.... ... although the data was so bad it was actually good: after all, if China is indeed sliding into contraction, there is no way the Fed will be hiking 5, 6, 7 or more times in a time when the rest of the global economy is about to fall off a cliff, no matter how many times an angry, senile Joe Biden calls Powell.
https://www.zerohedge.com/markets/china-economy-crashes-worse-expected-amid-covid-lockdowns
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