Manufacturing in China slowed in March amid Covid-19 outbreaks

OCCUPIED BUILDING This file photo from April 22, 2021 shows workers assembling engines in a workshop of Weichai Power Co. Ltd. in Weifang City, Shandong Province of China. PHOTO XINHUA

BEIJING: Manufacturing activity in China weakened in March as the country faced downward pressures, including a resurgence in Covid-19 infections that prompted widespread shutdowns, as well as growing geopolitical uncertainties.

Data from the National Bureau of Statistics (NBS) showed on Thursday that the Purchasing Managers’ Index (PMI) for the manufacturing sector fell to 49.5 last month from 50.2 in February.

A reading above 50 indicates expansion; below, a contraction.

NBS senior statistician Zhao Qinghe cited coronavirus outbreaks across the country and overseas uncertainties for the slowdown in factory operations and production.

Fueled by rising bulk commodity prices in the international market, the sub-index measuring the purchase prices of major commodities jumped 6.1 percentage points to 66.1 in the third month. Ex-factory prices reached 56.7, up 2.6 percentage points from the second month.

Production and market demand in the sector faded, with the production sub-index shedding 0.9 percentage points to 49.5. The new orders sub-index lost 1.9 percentage points to 48.8.

Some companies have either suspended production or shut down completely because of the pandemic, Zhao said. Production and operations of upstream and downstream companies have also been affected, he added.

Some companies bore the brunt of geopolitical uncertainties as their international orders were cancelled, the statistician said.

Meanwhile, the high-tech sector continued to grow and show resilience: its PMI accelerated to 50.4.

Large corporate operations were flat in March, with their PMI at 51.3. For medium-sized businesses, it slowed to 48.5 and for small businesses, to 46.6.

The surge in Covid-19 cases has also affected activity in the non-manufacturing sector, Zhao said, with the services sector sub-index hitting 46.7 in March, down 3.8 percentage points from to the previous month.

Companies in the rail transport, aviation, accommodation and catering sectors are facing increasing pressure, while those in telecommunications, satellite transmission and monetary and financial services continue to expand.

Business expectations of the construction industry have strengthened, with the sub-index of business activities in the sector standing at 58.1 last month, up 0.5 percentage points compared to February.

The data comes after Beijing pledged to implement more economic policies, including allocating 3.65 trillion yuan (about $575 billion) in special purpose bonds for local governments, to boost demand and to anchor market expectations.

At its executive meeting on Tuesday, China’s State Council reiterated its position that “policies aimed at maintaining economic stability should be introduced wherever possible and no policies that adversely affect market expectations will be introduced”, while pledging to take more measures to support economic growth.

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