According to a Reuters poll released on Thursday, September 29, China’s factory activity has decreased for the third consecutive month as Beijing’s harsh Covid-controlled measures hit many areas of the economy. 

A forecast from 26 economists polled by Reuters showed that China’s official manufacturing Purchasing Manager’s Index (PMI) was projected at 49.6 for September, almost unchanged from 49.4 in August.

In addition, Caixin/Markit’s PMI, focusing on small companies and coastal regions, dropped more than expected to 48.1 in September, down from 49.5 in August.

The figures below 50-point indicate contraction, while above 50 is seen as expansion.

Many economists and surveyed firms consider China’s zero-COVID policy as the greatest impact factor on growth.

As Beijing keeps imposing Covid curbs in major cities across the country, Min Joo Kang, an economist at ING, said in a note to Reuters, “This could contribute to falls in orders, employment and business confidence.”

Wang Zhe, a senior economist at Caixin Insight Group, said, “Manufacturing supply and demand contracted simultaneously. Although the COVID situation improved in Hainan province, the severity of outbreaks worsened in many other areas and containment measures limited the supply and demand in manufacturing.”

Caixin PMI shows that manufacturers posted a massive drop in sales. The sub-indexes for total new orders and new export orders both shrunk for the second month in September.

The Caixin sub-index of the number of purchases also fell in September, reflecting manufacturers had to scale back their purchasing activity during the month.

Bloomberg cited Natixis SA reporting that China’s Covid travel restrictions are estimated to have taken away about 1.1% from China’s GDP growth in the third quarter due to weakening consumption.

Meanwhile, the official PMI from China’s National Bureau of Statistics, which mainly focuses on big and state-owned firms, increased to 50.1 from 49.4 in August. A Bloomberg survey from economists showed an estimate of 49.7  Major financial institutions have cut their forecast for China’s 2022 growth to around 3%, much lower than its official target of 5.5%. The World Bank just cut China’s growth forecast for this year to 2.8%, down from 5% in April.

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