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China factory, services activity hit by COVID curbs
STORY: China’s factory activity shrank unexpectedly in October. That’s no thanks to softening global demand and strict domestic COVID-19 curbs, which hit production, travel and shipping in the world’s second-largest economy. The official manufacturing purchasing managers’ index, or PMI, fell to 49.2 from September’s 50.1, the National Bureau of Statistics said on Monday. That breaks below the 50-point mark that divides growth from contraction, after economists in a Reuters poll forecast the PMI to come in at exactly 50.0. Separately, the non-manufacturing PMI, which looks at service sector activity, fell to 48.7, from 50.6 in September. Many economists see China’s current zero-COVID policy as a major economic constraint, but expect restrictions to stay for some time after this month’s Communist Party Congress. As of last week, 31 cities have brought in varying levels of lockdowns or district-based control measures, affecting more than 230 million people, Nomura researchers found. Containment measures are reportedly disrupting factory output at iPhone maker Foxconn, with migrant workers seen leaving the massive assembly facility in the COVID-hit city of Zhengzhou amid infection worries. A person with direct knowledge of the matter told Reuters, COVID-19 woes at the Zhengzhou plant could slash the site’s November iPhone output by as much as 30%. Economists say slowing exports, a distressed property market and the yuan’s weakness against the U.S. dollar also weighed on the outlook for China. The latest Reuters poll forecasts 2022 growth at 3.2%, far below the country’s target of 5.5 percent.
