Manufacturing PMI In December: 6:00 AM GMT+5:30 on December 31, 2022, On December 31, 2022, at 1:33 PM GMT+5:30, it was updated.
As the virus spread through major cities and caused people to stay at home and close their companies, China abruptly reversed its Covid Zero policy, which caused economic activity, and its service sector, in particular, to grow at the worst rate since February 2020.
According to data released on Saturday by the National Bureau of Statistics, the official manufacturing purchasing managers index decreased from 48 in November to 47 last month. That was worse than the economist forecast of 47.8 from a survey conducted by Bloomberg.
The non-manufacturing index, which gauges activity in the services and construction industries, dropped from 46.7 in November to 41.6 in December, underperforming the average forecast of 45. Anything above 50 signifies expansion, whereas anything below 50 indicates contraction. The two measurements were at their lowest point since February 2020.
A component of the non-manufacturing index called the services PMI dropped from 45.1 in November to 39.4 in December. That represents the lowest reading since February 2020 and the contraction’s fourth straight month.
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The December numbers correspond to the month that the second-largest economy in the world abruptly abandoned its long-standing Covid Zero policy.
Through the first quarter of 2023, Covid’s continued spread could cause significant economic problems, with a projected travel rush over the impending Lunar New Year vacation aggravating the situation.
Before the change from Covid Zero, China’s economy was in trouble because restrictions to stop the infection spread slowed economic growth and kept the nation cut off from the rest of the globe.
The economy is expected to grow by just 3% in 2022 due to a continuing real estate market slowdown, weak consumer demand, and falling foreign demand for Chinese exports.
Image Source: statista
High-frequency data for December indicated that economic activity had fallen precipice as individuals stayed home and avoided stores due to escalating illnesses, and factory output had been restricted. Even some government operations were hampered.
The statistics bureau stated in a statement released along with the data that “manufacturing and consumption both dropped as Covid crisis delivered relatively substantial damage to firms, workers on duty and logistics.”
The output, new order, and employment PMI indices for the manufacturing sector all showed faster contraction in December than in November.
Another indicator of supply problems was a sub-index tracking suppliers’ delivery delays, which continued to decline. According to economists, the likelihood of a quicker and more powerful bounce later in 2023 is rising.
According to the median forecast of analysts surveyed by Bloomberg, growth is expected to build up to 4.8% for the year after the probably poor start in the January to March period.
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