"Again Due to Corona," Chinese Manufacturing Industry Reenters Contraction Phase After One Month

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] China's manufacturing sector has returned to contraction after a month due to the impact of COVID-19.

According to Bloomberg on the 31st, China's National Bureau of Statistics announced that the July manufacturing Purchasing Managers' Index (PMI) stood at 49. After the manufacturing PMI recorded 50.2 in June, marking an expansion phase for the first time in four months, it re-entered contraction territory within a month. The manufacturing PMI, based on surveys of business officials, is an indicator of economic trends; a reading above the baseline of 50 indicates expansion, while below 50 indicates contraction.

China's PMI had consistently remained below 50 from March to May due to lockdown measures in major cities such as Shanghai caused by COVID-19. The market had expected the manufacturing PMI to exceed 50 again in June, but the resurgence of COVID-19 in some regions of China appears to have impacted the index once more. Bloomberg reported, "The outbreak of COVID-19 in Shenzhen, a manufacturing hub in southern China, affected factory operations in the area and raised concerns related to supply chain disruptions."

The non-manufacturing PMI, which reflects trends in the service sector, also fell to 53.8 from 54.7 in the previous month.

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