Omicron impact on China manufacturing ‘ambiguous’ as November activity expands
- The official manufacturing purchasing managers’ index (PMI) rose to 50.1 in November, up from 49.2 in October
- The official non-manufacturing PMI, which measures business sentiment in the services and construction sectors, fell to 52.3 from 52.4 in October
China’s factory activity unexpectedly returned to expansion in November after seven months of decline due to an improved power supply situation and lower raw material prices, but the potential impact of the “big caveat” of the Omicron coronavirus variant remains “ambiguous”.
The figure was above the median forecast of a Bloomberg survey of analysts, which had predicted a rise to 49.7, as the subindex for sentiment among factory owners returned to positive territory for the first time since August as it reached 50.1 in November.
A reading above 50 indicates growth in sector activity, while a reading below the mark represents contraction. The lower the reading is below 50, the faster the pace of contraction.
Meanwhile, the official non-manufacturing PMI, which measures business sentiment in the services and construction sectors, fell slightly to 52.3 in November from 52.4 in October. This was above the Bloomberg survey of analysts, which had predicted a fall to 51.5.
“Looking ahead, most of the weakness in services should reverse in December unless – obviously a big caveat with the emergence of Omicron – there are new outbreaks. In that case, the authorities would turn to more stringent controls to contain it,” said Sheana Yue, an assistant economist at Capital Economics.