China’s manufacturing activity dropped in August for the second month in a row, official data showed Wednesday, as strict zero-Covid restrictions and extreme heat hit growth.
The Purchasing Managers’ Index (PMI), a key gauge of manufacturing activity
in the world’s second-biggest economy, came in at 49.4 in August, up from
July’s 49.0 but still below the 50-point mark separating growth from
contraction, National Bureau of Statistics (NBS) data showed.
Sporadic Covid-19 lockdowns around China have dampened consumer enthusiasm
and business confidence, while searing temperatures across large parts of the
country this summer prompted power rationing for factories.
The economy faced “unfavourable factors including the epidemic and high
temperatures” this month, NBS senior statistician Zhao Qinghe said in a
statement.
Zhao said the data showed “the recovery of manufacturing production and
demand still needs to be strengthened”, though he noted an uptick in activity
in agricultural product processing and food producers ahead of the mid-Autumn
festival on September 10.
China’s manufacturing PMI has been in contraction territory for five out of
the past six months, in the wake of a disruptive monthslong lockdown in
Shanghai and Covid-related restrictions elsewhere.
But officials show few signs of relaxing strict pandemic curbs, with the
southern tech hub of Shenzhen sealing off the world’s largest electronics
market this week despite just dozens of daily cases in the city of more than
18 million.
Chinese leaders had originally set a full-year GDP growth target of around
5.5 percent, but with economic expansion of just 0.4 percent in the second
quarter, analysts believe it is unlikely to hit that goal.
Zhao noted that while larger businesses saw an expansion in activity this
month, small and medium-sized enterprises reported contractions, dragging the
overall PMI down.
Meanwhile, China’s non-manufacturing PMI came in at 52.6 points in August,
down from 53.8 points in July, NBS data showed.
Statistician Zhao said that the accommodation, food and beverage and
telecommunications industries saw “sustained rapid growth” in the past month.
