Chinese manufacturing activity fell in October: official PMI | So Good News

By Ambar Warrick

Investing.com– China’s manufacturing activity unexpectedly fell in October, data showed on Monday, amid fresh disruptions from COVID-related lockdowns and weaker global demand for the country’s exports.

The PMI read 49.2 in October, missing expectations of 50.0 and falling below September’s reading of 50.1, data from the China Logistics Information Center showed.

A reading below 50 indicates contraction. After unexpectedly rising in September, the manufacturing PMI is now back in contraction territory.

China read 48.7 in October, well below expectations of 50.2 and 50.6 in September.

That led to China’s reading of 49.0 for October, which measures overall domestic business activity, its first contraction since May.

The weak data marked a slow start to the fourth quarter for the world’s second-largest economy, suggesting economic growth may be short-lived.

The introduction of new COVID-related restrictions in Shanghai and other major industrial centers is likely to be the biggest driver of the reading. The Chinese economy has been struggling to cope with a series of strict COVID sanctions this year, which have severely hampered growth.

Recently, Beijing has backed its strict COVID-19 policy, heralding some relief for Chinese businesses.

Recent outbreaks of COVID in industrial hubs such as Chengdu and Wuhan have already attracted new restrictions on movement. Worsening outbreaks are likely to prompt stricter controls.

But in addition to production disruptions, Chinese manufacturers are also facing a slowdown in global demand for domestic exports. The country has seen a series of declines this year as inflation and rising interest rates freeze manufacturing activity worldwide.

Weakening prospects for the manufacturing sector are likely to prompt Beijing’s stimulus measures to support economic growth. The government has so far implemented new infrastructure projects and eased financial conditions to support the economy.

It was trading near its lowest level since the 2008 financial crisis, and the currency is now weighing on it. It hit a record low against the dollar in October.