Manufacturing activity in China remains under pressure in November. The COVID measures under the Chinese government’s zero COVID policy are leaving visible traces in the manufacturing sector, but also in the service sector.
The official manufacturing purchasing managers’ index from the National Bureau of Statistics (NBS) was 48.0 in November, down further from 49.2 in October.
The official purchasing managers’ index for the service sector was 46.7 in November, down from 48.7 in October. The figures suggest that both sectors remain in contraction.
It is unclear at this time how the broader situation in China around COVID will continue. Several mainstream news agencies reported protests in various cities, some of which led to clashes between demonstrators and police. The Chinese government now appears to want to encourage older people to receive COVID vaccinations. This is seen as the first hurdle in opening up the country. Analysts at Nomura wrote Monday that more than 25% of China’s GDP is under lockdown.
This is compounded by cooling demand in the global market. Interest rate hikes by central banks, especially the U.S. Federal Reserve, have led to a slowdown in the global market. This is also hurting the Chinese economic engine.