China’s factory activity shrank in December as Covid-19 ‘continued to take a toll on the economy’

Caixin/Markit manufacturing purchasing managers’ index (PMI) fell to 49 in December, down from 49.4 in November

On Saturday, China’s official manufacturing PMI fell to 47 in December from 48 in November

3-MIN READ3-MIN

China’s Caixin/Markit manufacturing purchasing managers’ index (PMI) fell to 49 in December, down from 49.4 in November, data released on Tuesday showed. Photo: Xinhua

Published: 10:05am, 3 Jan 2023Updated: 11:37am, 3 Jan 2023

China’s factory activity shrank at a sharper pace in December as surging coronavirus infections disrupted production and weighed on demand after Beijing largely removed antivirus curbs, a private sector survey showed on Tuesday.

The Caixin/Markit manufacturing purchasing managers’ index (PMI) fell to 49 in December from 49.4 in November. The index has stayed below the 50-point that separates growth from contraction for five straight months.

The reading was the lowest since September but beat analysts’ forecast of 48.8 in a Reuters poll.

China’s larger official PMI survey on Saturday showed a much sharper decline, with the activity index falling to a near three-year low. The Caixin survey is believed to focus on smaller, export-oriented firms.

The figures provide a snapshot of the challenges faced by Chinese manufacturers who now have to contend with surging infections after the country’s abrupt policy U-turn in early December.

“Overall, the pandemic continued to take a toll on the economy in December,” said Wang Zhe, senior economist at Caixin Insight Group.

Supply contracted, total demand remained weak, overseas demand shrank, employment deteriorated, logistics was sluggish, manufacturers faced growing pressure on their profitability, and the quantity of purchases as well as inventories stayed low.