China’s factory activity contracted for the third straight month in December, with the sharpest drop in nearly three years as Covid-19 infections spread through production lines across the country. The official purchasing managers’ index (PMI) fell to 47.0 from 48.0 in November, according to the National Bureau of Statistics (NBS). This marks the largest drop since the early days of the pandemic in February 2020, with the 50-point mark separating contraction from growth on a monthly basis. Approximately 56.3% of surveyed manufacturers reported that they were greatly affected by the epidemic in December, an increase of 15.5 percentage points from the previous month. Despite this, many manufacturers said they expected the situation to gradually improve. The non-manufacturing PMI, which measures activity in the services sector, also fell to 41.6 from 46.7 in November, marking the lowest reading since February 2020. The official composite PMI, which combines manufacturing and services, declined to 42.6 from 47.1.
China’s manufacturing sector experienced a significant slowdown in December, with the sharpest contraction in nearly three years, as Covid-19 infections disrupted production lines across the country. According to the National Bureau of Statistics (NBS), the official purchasing managers’ index (PMI) fell to 47.0 from 48.0 in November. This marks the largest drop since the early days of the pandemic in February 2020, with the 50-point mark separating contraction from growth on a monthly basis. The decline in factory activity was largely driven by a decrease in new orders and production, as well as a decline in employment and raw material purchases.
Approximately 56.3% of surveyed manufacturers reported that they were greatly affected by the epidemic in December, an increase of 15.5 percentage points from the previous month. Despite this, many manufacturers said they expected the situation to gradually improve, possibly due to the government’s efforts to provide financial support to small and private businesses in the catering and tourism sectors that have been hard hit by the pandemic.
The non-manufacturing PMI, which measures activity in the services sector, also fell to 41.6 from 46.7 in November, marking the lowest reading since February 2020. This decline was driven by a decrease in new orders and employment, as well as a drop in business activity and business expectations. The official composite PMI, which combines manufacturing and services, declined to 42.6 from 47.1.
Overall, the slowdown in China’s manufacturing and services sectors reflects the ongoing impact of the Covid-19 pandemic on the country’s economy. However, some analysts believe that the worst may be behind China and that a strong economic recovery is ahead.