Chinese factory activity is expected to have prolonged its slump in December, a Reuters poll showed on Friday, as the end of the country’s “zero COVID” policy and a rise in infections began to hit its factories. production lines.
The official reading of China’s manufacturing purchasing managers’ index (PMI) likely held at 48.0 in December, according to the median forecast of 14 economists polled by Reuters, in line with the November reading, which was the lowest in seven months.
An index reading below 50 indicates contraction in monthly activity, while a reading above this mark indicates expansion.
The data offers the first glimpse from China’s National Bureau of Statistics into how factory activity was affected in December, after China eased its strict “zero COVID” rules, which prioritized virus containment over economic productivity. .
As a consequence, companies are now having to deal with a rise in COVID infections in the workforce, leading some analysts to anticipate worker shortages and further supply chain disruptions.
Fears of a global recession due to rising interest rates, inflation and the war in Ukraine have weakened foreign demand, which is likely to affect export-oriented Chinese manufacturers as well, already under pressure to catch up. now that antivirus restrictions have been dropped.
This means that manufacturers now face a difficult winter, despite the Chinese government’s renewed focus on pursuing economic growth.