Chinese Manufacturing Hindered by Zero-COVID... Caixin PMI Contracts for Fourth Consecutive Month

[Image source=Yonhap News]

[Asia Economy Beijing=Special Correspondent Kim Hyun-jung] Due to the impact of COVID-19 lockdowns and global supply chain instability, China's private manufacturing Purchasing Managers' Index (PMI) has not escaped the 'contraction' phase for four consecutive months.

On the 1st, Chinese economic media Caixin reported that the manufacturing PMI for November, released jointly with market research firm IHS Markit, recorded 49.4. This figure exceeds the previous month's 49.2 and the market forecast of 48.9, but it remains below the baseline (50) for the fourth consecutive month. A PMI above 50 indicates an expansion phase in the economy, while below 50 indicates contraction.

Caixin diagnosed, "Both demand and supply are weak due to the impact of the pandemic," adding, "Orders for consumer goods and intermediate goods slightly increased, but orders for investment goods significantly decreased." It further explained, "Due to the global economic slowdown and domestic delivery network issues, the export order index has also remained below the baseline for four consecutive months."

The official manufacturing PMI announced by China's National Bureau of Statistics the previous day was 48.0, down from 49.2 in October. After rebounding from 49.4 in August to 50.1 in September, the index fell below the baseline in October and showed further weakness this month. The index itself is at its lowest level since the Shanghai lockdown in May. The official indicator mainly surveys large state-owned enterprises, whereas the Caixin PMI covers export companies and small and medium-sized enterprises. By company size, the PMI was 49.1 for large enterprises, 48.1 for medium enterprises, and 45.6 for small enterprises, indicating that smaller companies are facing worse conditions.

The non-manufacturing PMI for the same month also fell to 46.7 from 48.7 in the previous month, and the official composite PMI, which includes both manufacturing and services sectors, recorded 47.1. This is not only a sharp drop from 49.0 in the previous month but also the lowest level in seven months. The construction sector showed relative strength, with the November construction activity index at 55.4, continuing an expansion trend for six consecutive months.

Meanwhile, according to the National Health Commission of China on the 1st, the number of new COVID-19 cases nationwide as of the previous day was 35,800 (31,720 asymptomatic), marking a decline for three consecutive days. After surpassing 30,000 on the 23rd of last month and setting daily records, new cases peaked at 40,052 on the 27th and have since shown signs of easing.