By Ambar Warrick
Investing.com-- Chinese manufacturing activity shrank for a third straight month in October, a private survey showed on Tuesday, as COVID-related lockdowns continued to disrupt the country’s massive industrial sector.
China’s yuan slumped to a nearly 15-year low after the reading, trading down 0.3% at 7.3228 against the dollar.
The Caixin Purchasing Managers index came in at 49.2 for October. The reading was slightly better than expectations of 49.0 and September’s figure of 48.1.
Still, a reading below 50 indicates contraction, and this is the third straight month that the Caixin PMI has read below 50. New COVID outbreaks in industrial hubs such as Shanghai and Wuhan, which saw the reintroduction of movement restrictions in the cities, likely drove the weak reading in October.
The Caixin reading also follows an official government PMI on Monday, which showed that China’s manufacturing sector performed substantially worse than expected in October. Overall business activity also contracted in the country.
The government PMI differs from the Caixin data in the scope of the participants surveyed. The government survey targets larger, state-run enterprises, while the Caixin PMI covers smaller, private firms. Investors usually use both readings to paint a broader picture of Chinese business activity.
China’s strict zero-COVID policy is at the heart of its economic woes this year, as a series of COVID lockdowns in major industrial hubs ground business activity to a halt. October’s data shows that the Chinese economy may be due for more ructions after a brief period of relief.
Data released last month showed that while the Chinese economy grew more than what markets were expecting in the third quarter, it missed growth projections by the People’s Bank.
The government rolled out a slew of stimulus measures this year to help shore up economic growth. But the measures are yet to spur any marked improvement in the country’s economic situation. Chinese factories are also facing sluggish overseas demand due to a global decline in economic growth.
Foreign investors are also wary of China after the government recently reiterated its support for its zero-COVID policy. Concerns over anti-business measures in the country, after President Xi Jinping secured a third consecutive term, also dented sentiment towards the country.