The People's Bank of China. Photo: AFP / Mark Ralston

China’s economy returned to growth in the second quarter, rebounding more strongly than expected from a historic contraction caused by the coronavirus outbreak, official data showed Thursday.

Gross domestic product expanded a surprise 3.2% in April-June, the National Bureau of Statistics said, as workers, factories and firms cautiously returned to normality after harsh lockdowns brought the virus under control.

However, retail sales – a key indication of consumer sentiment in the world’s second-largest economy – fell short of expectations, shrinking 1.8% on-year last month.

The coronavirus, which first emerged in the city of Wuhan late last year, has since shut businesses and destroyed hundreds and millions of jobs globally, and likely tipping the world economy into recession.

China’s official figure was markedly better than the 1.3% on-year growth tipped by an AFP poll of analysts, although still among the lowest rates on record.

The economy contracted 1.6% on-year in the first six months, the NBS said, while the urban unemployment rate dipped to 5.7% in June, from 5.9% a month earlier.

The employment figure remains closely watched, with nearly nine million graduates expected to enter an uncertain labor market this year and analysts pointing out that actual unemployment is likely higher.

Tommy Wu, an economist at Oxford Economics, noted in a report last month that the “survey-based unemployment rate substantially understates labor market stress as the measure excludes large numbers of unemployed (would-be) migrants.”

Industrial production continued to climb in June, growing in line with expectations at 4.8%, up from 4.4% in May.

Some expect China to be the only major economy to see growth in 2020, as it was the first to be hit by the virus and likely first to bounce back.