The official manufacturing PMI, a measure of factory activity where a 50 mark separates the monthly expansion from shrinkage, fell to a five-month low of 49.5. Non-manufacturing PMI fell to 48.4, its lowest level since August. The data comes as China battles the worst Covid-19 outbreak in two years. China has severely curtailed the virus through outbreaks, quarantines, travel restrictions and mass testing. As a sign of the country’s continued commitment to this approach, Shanghai, China’s main financial center, launched a lockdown this week that splits the city in two and excludes it from the rest of the country. Officials had previously stated that no lockdown would be imposed. Zhao Qinghe, a senior statistician at the National Bureau of Statistics, said cases across China had had an impact on businesses. He noted that some companies had said that there was insufficient staff due to the virus and added that the range of delivery times was at its lowest level since March 2020. Julian Evans-Pritchard, China’s senior economist at Capital Economics, said the PMI figures “indicate that the economy is shrinking at a faster pace since the peak of the initial Covid-19 epidemic in February 2020.” The downturn in manufacturing “was driven entirely by the sharp drop in the services index,” he added, “as severe travel and lockdown restrictions were re-imposed across the city and consumers became more cautious amid renewed outbreaks of the virus.”
