Home Business China’s factory activity fell in October due to Covid controls

China’s factory activity fell in October due to Covid controls

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Business activity in China fell in October, official data showed on Monday. An aluminum products company is located in Jiangsu Province in this photo taken on Oct. 27, 2022.

Vcg | Visual China Group | Getty Images

BEIJING – China’s factory activity fell in October due to frequent outbreaks of Covid, the National Bureau of Statistics said on Monday.

The official PMI for manufacturing fell to 49.2 this month from 50.1 in September, the data showed.

According to analysts polled by Reuters, economists had expected a print of 50.

Readings below 50 indicate a contraction in business activity, while numbers above 50 reflect expansion. The index examines enterprises by working conditions.

The index dipped below 50 for six of the 10 months of the year.

Sub-indicators of factory employment, production, new orders and supplier lead times all showed contractions in October compared to September.

“The decline in manufacturing PMI was driven by a drop in the new orders sub-index (to 48.1 in October from 49.8 in September), suggesting weaker demand going forward,” Nomura’s chief China economist Ting Lu said in a note.

He noted that the employment sub-index is now in contraction territory for 19 consecutive months.

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Service activity is down

According to data released on Monday, service activity in China fell in October for the first time since May.

In October, the purchasing managers’ index in the non-manufacturing sphere was 48.7.

However, the statistics office said sub-indicators for postal services, internet software and information technology services were above 60 in anticipation of increased business ahead of Shopping Day in November.

Services and consumption have been weak since the pandemic began nearly three years ago.

Analysis by Goldman Sachs showed that the contribution of hotel and restaurant services to GDP is almost 20% below the 2019 trend.

The GDP of the industrial sector is in line with the trend of 2019 thanks to strong demand from abroad, analysts note.

They noted the extent to which agriculture has bucked the trend before the pandemic as Beijing has focused on food security.