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Chinese PMIs shrink further in November as zero-COVID weighs

Economic Indicators Nov 30, 2022 12:48
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By Ambar Warrick 

Investing.com-- Chinese economic activity fell below expectations in November, data showed on Wednesday, as disruptions caused by COVID-related lockdowns continued to chip away at growth and worsened sentiment among manufacturers.

The official manufacturing purchasing managers index (PMI) fell to 48.0 in November, government data showed, missing expectations for a reading of 49.0 and slipping well below last month’s reading of 49.2. 

Sectors outside manufacturing saw an even bigger contraction, with the non-manufacturing PMI reading 46.7 for November, missing expectations of 48 and falling from last month’s reading of 48.7.

This saw overall business activity in the country contract further, with the composite PMI reading 47.1 for November, down from last month’s reading of 49.0.

A PMI reading below 50 indicates contraction in the sector. 

Chinese manufacturing activity, which is a bellwether for the country’s economy, has declined steadily in the fourth quarter as rising COVID-19 cases caused more disruptions. This trend largely cut short a brief rebound seen in the third quarter. 

China is now grappling with a record-high daily increase in COVID-19 cases, which has spurred lockdown measures in several economic hubs. 

Weakening economic trends are now putting the country's overall business activity under pressure. While strength in the services sector had initially helped keep overall business activity in expansion territory, this trend appears to be reversing. 

China was also rocked by unprecedented civil disobedience over the past week, as citizens in several major cities protested against the government’s strict zero-COVID policy.

The policy is at the heart of China’s economic woes this year, and has severely disrupted business activity with a series of lockdown measures. 

The weak PMI reading, which has now shrunk for a second consecutive month, likely heralds a dismal GDP reading for the fourth quarter. 

But worsening economic trends, coupled with the recent protests, have driven widespread speculation that the Chinese government will be forced into scaling back its zero-COVID policy in 2023. Chinese markets rallied in recent sessions on that notion.  

The yuan rose 0.2% on Wednesday despite the weak reading, as traders bet on a Chinese reopening. 

Chinese PMIs shrink further in November as zero-COVID weighs
 

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