Asia, meanwhile, dipped lower to start the week.
China’s economic outlook
Industrial production increased 4.4% in May compared to a year ago, according to data from China’s National Bureau of Statistics, improving slightly from the month before.
Investment activity, meanwhile, fell 6.3% for the first five months of the year. While negative, economists at Capital Economics pointed out that the percentage implies a significant improvement in May compared to the months prior: Such activity fell more than 10% from January-to-April.
And while retail sales fell 2.8% in May compared to the prior year, that was still better than April’s 7.5% decline. Still, the three readings all fell below forecasts from analysts polled by Refinitiv.
Activity in the country’s services sector expanded for the first time this year, according to China’s National Services Industry Manufacturing Index. The index measures the change in output of the services sector each month.
“Overall economic output returned above 2019 levels in May for the first time since the Covid-19 outbreak,” Martin Rasmussen, China economist for Capital Economics, wrote in a research report on Monday. “We had previously thought that China’s economy wouldn’t return to positive year-on-year growth until [the third quarter]. But today’s data suggest that this milestone may be reached this quarter.”
There are still significant signs of weakness in the world’s second largest economy. The unemployment rate in May was 5.9%, slightly better than April’s 6%. Rasmussen, though, pointed out that migrant workers who lost their jobs are not properly accounted for in that survey.
He added that growth in industrial sales for exports turned negative in May, suggesting that “external demand will remain a drag.”
“Nerves around a second wave persist in the background,” wrote Stephen Innes, chief global markets strategist at AxiCorp, in a research note Monday.
Oil also moved lower. US oil futures on Monday tumbled more than 3%, trading at $35.08 per barrel. Brent, the global oil benchmark, lost more than 2% to $37.84 per barrel. Both contracts plunged more than 8% last week amid concerns of a resurgence of the pandemic.
— Matt Egan and Anneken Tappe contributed to this report.