China factory activity shrinks as COVID curbs hit output, demand - PMI

China factory activity shrinks as COVID curbs hit output, demand - PMI

China's Oct factory activity shrinks as COVID curbs output hit output, demand- Caixin PMI Employee works on the production line of Nio electric vehicles in Hefei.

BEIJING Reuters -- China's factory activity fell in October due to protracted COVID 19 restrictions disrupted production and subdued demand, a private sector survey showed on Tuesday that there was a weaker economic recovery in the fourth quarter.

The PMI for the manufacturing purchasing managers of Caixin S&P Global stood at 49.2 in October, up from 48.1 in September and slightly above analysts' expectations for 49.0. The figure was still below the 50 point mark that separates growth from contraction on a monthly basis.

In line with China's official PMI, which fell into contraction last month, waning factory activity weighed on the fragile recovery of the world's second-biggest economy amid a deepening property crisis and weakening demand.

The PMI showed that both output and new orders extended declines at the beginning of the fourth quarter as a pickup in COVID 19 clusters and stringent containment measures dragged on any meaningful rebound.

There was a softer activity on the labour market as manufacturing employment fell for the seventh month in a row.

Wang Zhe, economist at Caixin Insight Group, said that the current domestic and international environments are complicated and tough and have increased unfavourable factors affecting economic development.

Wang said the spread of the coronaviruses in many areas has a significant impact on supply and demand.

As Winter nears, officials in Chinese cities and provinces are closing venues including the Shanghai Disney Resort and enforcing longer lockdowns on millions of people, because of the fact that there is no punch in stamping out sporadic COVID outbreaks.

A vast assembly facility of the iPhone maker Foxconn in COVID-hit Zhengzhou in central China has been rocked by discontent over stringent anti-virus measures, with workers fleeing the site over the weekend.

Analysts think that China's current zero-COVID policy is a major economic constraint and expect restrictions to be in place for some time after October's Communist Party Congress.

The index of new export orders shrank for the third consecutive month because of the downside risks for exports, as the Ukraine war and the global interest rate hikes clouded external demand for Chinese goods.

The PMI of Caixin Manufacturing is focused on small firms and coastal regions where there are a great number of exporters.