China’s manufacturing, services shrink in October as zero-Covid policy bites
China's the non-manufacturing PMI also fell to 48.7
Covid-related restrictions seem to have had an adverse impact on China’s manufacturing activity, as the country’s purchasing managers index (PMI) shrank to 49.2 in October, according to the data released by the National Bureau of Statistics (NBS) on Monday. In September, the PMI was at 50.1
In PMI parlance, a score above 50 means expansion, while a score below 50 denotes contraction.
Apart from that, the non-manufacturing PMI, which is the service sector activity, also fell to 48.7 from 50.6 in September.
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"The official PMIs point to a further loss of momentum in this month as virus disruptions worsened and export orders remained under pressure," said Zichun Huang, an economist at Capital Economics, in a research note, reports Reuters news agency.
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"With the zero-Covid policy here to stay, we think the economy will continue to struggle heading into 2023."
So far, 31 cities have been out under lockdown, affecting around 232 million people, Nomura said in a research note.
Experts believe that China’s draconian zero-Covid policy could further dampen the country’s road to economic recovery, with restrictions expected to remain in place for some more time.
"We don't expect the zero-Covid policy to be abandoned until 2024, which means virus disruptions will keep in-person services activity subdued," said Huang from Capital Economics.
The adverse impact of Covid restriction is already being felt at Apple supplier Foxconn's iPhone manufacturing facility in China's Zhengzhou city.
The company has decided to slash the November iPhone shipments by up to 30 per cent, Reuters news agency reported citing a source.
The plant, which employs about 200,000 workers, has in recent days hit by worker discontent over stringent Covid measures.
Several migrant workers reportedly fled the plant over the weekend for their hometowns, driving cities to hastily draw up plans to accommodate them.
(With inputs from agencies)
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