China’s Manufacturing Activity Contracted Further in April

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Data offer early glimpse of the economic toll from strict zero-tolerance Covid lockdowns in cities

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The subindex of factory production plummeted to 44.4 in April from 48.8 in March, the statistics bureau said. The sharp decline came as some factories reduced or even halted production due to the spreading virus, said Zhao Qinghe, a senior official at the statistics bureau.

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The rapid deterioration in the manufacturing reading offers a first glimpse into the stark economic cost of China’s zero-tolerance approach to the Covid-19 Omicron variant, which put the entire northeastern province of Jilin and dozens of cities—included Shanghai, a bustling financial hub of 25 million people—under weeks of lockdown. Most of the harshest measures were imposed in late March.

“Many enterprises reported increasing difficulties in logistics and transportation, as well as difficulties in the supply of major raw materials, poor sales of finished products, overstocking and so on,” Mr. Zhao said. As a result, he added, the production and operation of businesses up and down the supply chain were greatly affected.
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The subindex measuring total new orders dropped deeper into contraction territory at 42.6 in April, from 49.5 in March. The subindex tracking export orders, likewise, fell to 41.6 in April, from a reading of 47.2 the previous month.

Separately, China’s official nonmanufacturing purchasing managers index, also released Saturday and tracking both the services and construction industries, plunged to 41.9 in April from 48.4 in March. Nineteen out of 21 surveyed industries, including transportation, accommodation and catering, recorded contractions in activity, the statistics bureau said.

The 41.9 reading was China’s lowest since the 29.6 level recorded in February 2020, as the central Chinese city of Wuhan was put under strict lockdown.

The subindex measuring service activity tumbled to 40.0 in April, from 46.7 in March, while the subindex tracking construction activity dropped to 52.7 from 58.1 in March.

Write to Jonathan Cheng at [email protected]

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Credit: www.wsj.com /

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