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China’s recovery from Covid lockdown restrictions is going “from bad to worse” after its economy grew at a frail pace in the second quarter.

Gross domestic product grew just 0.8pc in the three months  to June from the previous quarter, on a seasonally adjusted basis, data released by the National Bureau of Statistics showed.

The figure was ahead of economists expectations of a 0.5pc increase but on an annual basis, its expansion of 6.3pc was well below the forecast for growth of 7.3pc.

The annual pace was the quickest since the second quarter of 2021 but was heavily skewed by economic pains caused by stringent Beijing’s zero-Covid restrictions in Shanghai and other major cities last year.

The youth jobless rate climbed to 21.3pc in June from 20.8pc in May, a new record high, as graduates scrambled for limited offers during the job hunting season.

China’s property sector, which accounts for about a quarter of the economy, remains firmly in a downtrend, with new home prices for June stalling.

Property investment slumped 20.6pc in June year-on-year after a 21.5pc drop in May, according to Reuters calculations.

Moody’s Analytics economist Harry Murphy Cruise said the numbers are a “worrying result” for China’s economy.

He added: “China’s recovery is going from bad to worse. 

“After a sugar injection in the opening months of 2023, the pandemic hangover is plaguing China’s recovery.”

China’s property investment contracted at a steeper pace in the first half of the year, underlining the sector’s deepening downturn as policymakers pledge more support.

Investment in property development fell 7.9pc in the first six months of 2023, compared with a 7.2pc decline in January-May, data published Monday by the National Bureau of Statistics showed. Economists surveyed by Bloomberg had forecast a drop of 7.5pc.

China’s real estate market has struggled recently after a brief first-quarter rebound. Home sales tumbled in June, snapping a four-month rebound. Housing prices dropped in the month for the first time this year. 

The country’s two-year credit crisis among developers has shown no sign of easing. A defaulted builder recently failed to find a buyer for a heavily-discounted project, while fears have grown that even state-owned firms aren’t immune to the industry’s liquidity squeeze.

The property sector, including related industries, make up about a fifth of China’s gross domestic product. Investors see its turnaround as crucial to the recovery of the overall economy.