Not good news from China with two reports showing the pace of economic activity slowed noticeably in January ahead of the week long Lunar New Year break starting tomorrow and the 2022 Winter Olympics starting Friday.
Both the official survey of manufacturing and services and the private sector survey from Caixin business magazine confirmed the weakening pace of activity from December when there was a slight recovery in the slide that began midyear, especially in manufacturing.
Analysts blamed the continuing outbreaks of small pods of Covid infections across the country and the Government’s ultra-tight controls on movement ahead of the New Year break and the Games for slowing the economy.
China Sunday reported 34 Covid cases among Olympic athletes and officials at the games, up from 19 on Saturday.
The official manufacturing Purchasing Manager’s Index (PMI) was 50.1 in January, remaining above the 50-point mark that separates growth from contraction, but slowing from 50.3 in December, data from the National Bureau of Statistics (NBS) showed on Sunday.
December’s reading was the same as in November but ahead of the low 49.2 reading for October when the economy was hit by power rationing and an upsurge in Covid infections.
The official results contrasted with those in the private Caixin survey of mostly small manufacturers in coastal regions, which showed activity fell at the fastest rate in almost two years – the cost regions are where most of the country’s exporters are located, especially in Guangdong.
The Caixin survey came in at 49.1, the lowest in 23 months and down sharply from 50.9 in December.
A survey on China’s sprawling services sector also showed growth slowing in January, as virus containment measures hit consumer sentiment.
China’s official composite PMI, which combined manufacturing and services, stood at 50.1 in January a sharp fall from December’s 52.2.
China’s economy grew 4.0% in the fourth quarter from a year earlier, its weakest expansion in one and a half years.
The International Monetary Fund last week cut its 2022 China GDP forecast to 4.8%, from 5.6% previously, reflecting the property sector’s slide and the hit to consumption from strict COVID-19 curbs.
