Rise in Covid cases slows manufacturing in China to weakest in two years
Output from China’s manufacturing sector slowed to its weakest in almost two years in January as the country’s tough anti-Covid measures forced factories into temporary shutdowns.
A monthly snapshot of industry in the world’s second biggest economy showed production being hard hit by Beijing’s zero-tolerance approach to the pandemic.
The Caixin/Markit purchasing managers’ index dropped from 50.9 in December to 49.1 in January – putting pressure on China’s policymakers to step up support for the flagging economy.
A reading below 50 suggests output is contracting rather than expanding, with January’s figure the weakest since February 2020, when blanket restrictions were in force during the first wave of the Covid-19 virus.
Wang Zhe, a senior economist at Caixin Insight Group, said:“Over the past month, there were Covid-19 flare-ups in several regions in China, underscoring the downward pressure on the economy.
“Both supply and demand in the manufacturing sector weakened. Several regions tightened epidemic control measures following the resurgence, which impacted production and sales of manufactured goods. The subindexes for output and total new orders in January fell to their lowest since August. Overseas demand shrank at an even faster pace.”
Wang said the spread of the Omicron variant overseas hit China’s external demand, with the gauge for new export orders in January the lowest in 20 months.
Craig Botham, the chief China economist at Pantheon Macro, said: “A spike in Covid cases – a mix of Delta and Omicron – is the primary driver of the slowdown in January, along with factory closures ahead of the lunar new year holiday, and a smattering of production limits to limit air pollution during the Winter Olympics.”
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