Chinese manufacturing PMI dented by COVID curbs in November- Caixin

By Ambar Warrick 

Investing.com-- Chinese manufacturing activity shrank for the third consecutive month in November, a private survey showed on Thursday, as strict anti-COVID measures continued to disrupt factory operations, while demand also softened. 

The Caixin Manufacturing Purchasing Managers Index (PMI) read 49.4 in November, slightly edging past expectations of 48.9 and rising above October’s reading of 49.2. But the index was below 50 for a third consecutive month, indicating a sustained decline in manufacturing activity.

The reading also came in line with government data released on Wednesday, which showed a pronounced decline in overall Chinese business activity in November.

But the Caixin survey differs from the official one in what companies are covered. While the government survey is bigger in scope and targets larger, usually state-run industries, the Caixin survey covers a smaller pool of private companies.

Both indicators were negative for November, indicating that COVID-related disruptions have severely dented economic activity in China. The country is now seeing a record-high daily rise in infections.

Weakening local and overseas demand for Chinese goods also factored into slowing production in November, analysts as S&P Global, which compiles the Caixin data, said on Thursday.

“Overall, the pandemic continued to take a toll on the economy. Output contracted, total demand was under pressure, overseas demand remained weak, employment deteriorated, logistics was sluggish, and manufacturers faced growing operating pressure,” Wang Zhe, Senior Economist at Caixin Insight Group wrote in a note.

“The market is in urgent need of policies to promote employment and stabilize domestic demand. Beijing should further coordinate fiscal and monetary policies to expand domestic demand and boost incomes of the poorer parts of the population.” 

Growing ire over Beijing’s strict anti-COVID policies sparked a wave of unprecedented protests across China over the past week. This saw the government relax some COVID restrictions in two major cities- a rare display of cooperation with civil disobedience.

Still, the government has given no indication that it plans to completely scale back its zero-COVID policy. The policy is at the heart of China’s economic slowdown this year, and is likely to weigh on activity if maintained over the coming months. 

The yuan was little affected by Thursday's data, rising 0.3% on somewhat dovish signals from the U.S. Federal Reserve.