COVID woes: China’s factories report activity slump to lowest level in 3 years

China’s manufacturing activity contracted sharply in December to the worst level in nearly three years as an avalanche of Covid-19 infections battered the economy, with analysts warning of further risks, the South China Morning Post has reported.

The report said official manufacturing purchasing managers’ index slid to 47.0 in December, the lowest since a reading of 35.7 in February 2020, early in the coronavirus pandemic, according to data released by the National Bureau of Statistics on Saturday.

Major sub-indices gauging production, new orders and deliveries dipped further below the 50 mark that separates growth from contraction, indicating persistent weakness in demand and the overall business climate.China’s manufacturing activity contracted sharply in December to the worst level in nearly three years as an avalanche of Covid-19 infections battered the economy, with analysts warning of further risks.

“The pandemic has led to big disruption to both the supply and demand sides of enterprises, staff attendance and logistics,” Zhao Qinghe, a senior economist at the bureau, said.

Zhao said 56.3 per cent of the producers surveyed noted a big impact from the pandemic on their operations, compared with 40.8 per cent in November, while companies also reported labour shortages.China’s abrupt pivot away from hard-line zero-Covid controls early this month was widely welcomed by the business community and economists, who predict a quick recovery next year.