China: Weaker Production Growth With Covid Controls

China’s business condition in manufacturing sector grew weaker as the Caixin China manufacturing PMI descended slightly at 48.1 in Sep-22 (Aug-22: 49.5).

This mild moderation in manufacturing activities mainly due to containment measures for the COVID-19 virus in China.

The PMI recorded the lowest since May-22 as the new orders fell at the fastest pace in Sep-22. Reduction in new business, foreign sales, employment capacities and demand conditions also contributed to poor manufacturing performance.

However, on the other side, cost pressure eased further in Sep-22 due to weaker demand helped customers to encourage sales with the rate of discounting rising to a steady pace.

“Currently, the economy’s biggest issues are a lack of jobs, weak demand and erratic expectations. Going ahead, we expect the manufacturing sectors will perform better in future with the anticipated relaxation of COVID-19 restrictions and further improvement in labour market as the unemployment rate indicates downward trend.

“However, concerns of global economic slowdown and aggressive monetary tightening will pull back industrial growth at a slower pace,” says MIDF.