China's industrial output and retail sales surged in the first two months of the year, official data showed Monday, underscoring the country's recovery from the coronavirus pandemic.

Industrial production spiked a forecast-busting 35.1 percent on-year, the biggest bounce in decades, while retail sales also beat expectations with 33.8 percent growth.

But the National Bureau of Statistics said the latest surge was in part due to distortions from last year's "low base in the same period".

Both indicators plunged in the early months of 2020 after Covid-19 surfaced in central China and spread rapidly around the country.

However, the world's second-largest economy became the first to bounce back globally after imposing strict lockdowns and virus control measures, clocking a full-year economic growth of 2.3 percent.

"After removing the base effect, the growth of main indicators is stable and macro indicators are in a reasonable range," said the NBS.

Data for January and February were released together to eliminate the influence of uncertainties brought about by China's Lunar New Year holiday, which typically falls within this period.

Industrial output in the first two months was up almost 17 percent from the corresponding period in 2019, authorities said.

Industrial activity was likely boosted by the fact that many migrant workers were discouraged from returning to their hometowns because of Covid-19 restrictions, meaning some factories remained open through the holiday or reopened sooner.

"We expect activity to remain strong in the near-term, as the easing of virus restrictions boosts consumption and fiscal stimulus among key trading partners should keep exports strong," said Capital Economics senior China economist Julian Evans-Pritchard.

Urban unemployment rose to 5.5 percent in February, up from 5.2 percent in December, Monday's data showed, but experts warn that the real rate might be higher owing to the high number of workers in unofficial employment.

"Even though we do see improvement on the global economic environment, they are still very cautious," said OCBC Bank's head of Greater China research Tommy Xie, on the issue of unemployment.

He noted that the urban unemployment rate remains within the government's target, adding that the caution was likely due to another potential record number of graduates entering the job market this year.

He added that there is an "uneven recovery" ongoing as well, with smaller firms and industries such as travel not fully recovered from the coronavirus hit.

Iris Pang, chief economist for Greater China at ING, said: "All in all, this set of data shows the Chinese economy is recovering from Covid, especially in terms of consumption. But the very low base also masked the degree to which these strong figures are driven by underlying growth.

"These low base-effects could last until April as economic activity started to pick up in May last year."

She tipped the economy to expand 12 percent on-year in the first quarter.

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