China’s factory, services activity contract further in November as ‘inevitable’ coronavirus curbs weigh on economy
- China’s official manufacturing purchasing managers’ index (PMI) fell to 48 in November from 49.2 in October
- Official non-manufacturing PMI, which measures business sentiment in the services and construction sectors, fell to 46.7 in November from 48.7 in October
The “inevitable” economic cost of Chinese cities being forced to impose restrictions amid a surge in coronavirus cases has already started to appear, analysts say, as activity in China’s factory and services sectors slowed further in November.
This was the lowest reading since April after remaining below the 50-mark that separates growth from contraction on a monthly basis for a second consecutive month, and it comes at as coronavirus disruptions and lockdowns have returned across China, with daily infections rising to around 40,000.
The reopening process has started, which will likely help the economy rebound in the second half of 2023
“The China NBS purchasing managers’ indices survey suggested manufacturing activity worsened in November on tightened Covid curbs and weak demand,” said analysts at Goldman Sachs.
The decline in both gauges, which provide an early indication each month of economic activities, dragged the official composite PMI, which includes both manufacturing and services activity, down to 47.1 from 49 in October.
“Economic activities will likely weaken further in December and the first quarter. The reopening process has started, which will likely help the economy rebound in the second half of 2023,” Zhang Zhiwei, chief economist at Pinpoint Asset Management, said after China eased up a little on its zero-Covid policy earlier this month, including reducing quarantine periods for overseas arrivals.