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China’s factory activity fell in October bogged down by Covid controls

China’s factory activity fell in October, official data showed on Monday. Pictured here on Oct. 27, 2022 in Jiangsu Province is an aluminum products company.

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BEIJING – China’s factory activity fell in October due to frequent Covid outbreaks, the National Bureau of Statistics said on Monday.

The official PMI for manufacturing fell to 49.2 this month, down from 50.1[ads1] in September, the data showed.

Economists had expected a print of 50, according to analysts polled by Reuters.

Readings below 50 indicate a decline in business activity, while numbers above 50 reflect expansion. The index surveys companies on operating conditions.

The index has fallen below 50 in six out of 10 months of the year so far.

Sub-indicators of factory employment, production, new orders and delivery time for suppliers all fell in October compared to September.

China’s factory activity fell in October bogged down by Covid controls

“The decline in manufacturing PMI was notably driven by a drop in the new orders sub-index (to 48.1 in October from 49.8 in September), pointing to weaker future demand,” said Nomura’s chief China economist Ting Lu in a note.

He pointed out that the employment index has now been in contraction territory for 19 consecutive months.

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Service activity is decreasing

China’s service activity fell in October for the first time since May, data released on Monday showed.

The purchasing managers’ index for non-industry came in at 48.7 in October.

However, the statistics agency said sub-indicators for postal services, internet software and information technology services were above 60 pending a pickup in business for the Singles Day shopping festival in November.

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Services and consumption have been weak since the pandemic started almost three years ago.

Goldman Sachs’ analysis found that the GDP contribution from hotel and restaurant services is almost 20% below the 2019 trend.

Manufacturing sector GDP is in line with the 2019 trend, thanks to strong foreign demand, the analysts said.

They noted how agriculture has outperformed its pre-pandemic trend as Beijing has emphasized food supply security.

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