According to China’s National Bureau of Statistics (NBS), released on Saturday, the manufacturing and services sectors dropped sharply in April. The data shows a two-year low due to the Zero-Covid strategy on China’s overall economy.
The purchasing managers’ index (PMI) for the manufacturing sector fell to 47.4 in April, down from 49.5 in March.
A reading above 50 suggests expansion, while a reading below the number reflects contraction.
The official data also fell below the median forecast of 48.00 from 26 economists polled by Reuters.
The PMI for the non-manufacturing sector also fell sharply to 41.9 in April, down from 48.4 in March.
NBS senior statistician Zhao Qinghe said the latest COVID-19 outbreak hurt China’s services sector most, with a PMI of 40 in April, down 6.7 points. Zhao added the survey showed 19 of the 21 segments in the services sector contracted in April.
The April sub-index for production decreased to 44.4, down 5.1 points from March.
For the non-manufacturing sector, the PMI was down at 41.9 in April, dropping from 48.4 the previous month.
Reuters cited a note from Morgan Stanley, saying that, despite partly sustaining production under closed-loop management, “the lockdown impact on the manufacturing sector would be more than headline PMI shows, given the unwarranted support from longer supplier delivery time amid road logistics disruptions.”
According to the World Economics reports on April 22, China’s Sales Managers Index (SMI) dropped to 49.2, a 22-month low, from 51.8 in March.
The report also noted that the COVID lockdown impacts economic activity in all areas. Furthermore, roughly 49% of survey companies confirmed the COVID-19 blockade in China had hit their business.