China Caixin Manufacturing Contracted at A Steeper Rate in November Due to Covid Led Restrictions
On Wednesday, the National Bureau of Statistics in China released monthly data expressing that all factory activities contracted at a steeper pace in November compared to October due to the magnified lockdowns for dealing with the rising number of COVID cases.
During November, the manufacturing sector activity (PMI) in China plummeted to 48 on the official index, as opposed to to October's 49.2, which is a two-month consistency concerning the downward movement.
[For comparison, a 50-index point is positive and indicates expansion, while anything lower than that means contraction.]
The combined PMI for manufacturing and non-manufacturing in November was 47.1, lower than October's 49.In comparison to April, November's manufacturing data is the lowest.
The decreasing rate of manufacturing activity arrives as the number of new COVID cases surged, hitting 40,000 new cases per day on Tuesday, along with a concurrent new wave of lockdowns leading to incredible protests.
On Wednesday, Beijing hinted that it,,under pressure from the public, might ease the strict lockdown rules; restraints over such movement were relaxed slightly in the two cities–the port city of Guangzhou and Chongqing.
On Tuesday, the relaxations in lockdown restrictions due to COVID pursued conflicts between protesters and police in Guangzhou.
The oil demand from China has weighed on the prices of oil, resulting in a price drop of 4 percent on Monday prior to cutting those losses by Wednesday.
According to the beliefs of Wall Street, it is believed that by next year, China will resume activities with skyrocketing demand, which will lead to significantly higher oil prices.
On Wednesday, as per the senior market analyst at Oanda Corp, Ed Moya, oil started to get its groove back, and it is anticipated that both supply and demand drivers for crude could turn bullish. In case China relaxes its Covid rules and OPEC continues to stay the course, prices of crude could round up another 5-10 percent here.
China Caixin Manufacturing PMI Heads for the 4th Consecutive Month of Contraction
A private activity gauge in the manufacturing sector of China resumed being in contractionary territory in November, making it the fourth straight month as the strict COVID regulations set in place by the government kept weighing on both outputs as well as demand.
As per Thursday's data by Caixin Media Co. and S&P Global, there was a slight improvement in the China Caixin manufacturing purchasing managers index in November that revised to 49.4 compared to October's 49.2.
As per the index, a reading exceeding the 50 mark implies an expansion in activity, while one lower than it suggests activity contraction.
According to a senior economist at Caixin Insight Group, Wang Zhe, the output's subindexes and all new orders were lower than 50 for the straight third and fourth months.
In the fourth consecutive month, the gauge for new export orders was in contraction, indicating that the global need for Chinese products persisted in declining.
Wang continued by stating that, For the eighth straight month, employment persisted in shrinking, recording the poorest performance since February 2020, as COVID outbursts made it more challenging for a few workers to go back to factories. And companies were not looking to recruit new workers to fill the positions.
In continuation, the market desperately seeks policies that boost employment and balance domestic demand. Beijing needs to synchronize monetary and fiscal policies further in order to augment domestic demand and stimulate the incomes of the poorest population.
The statistics bureau in China said on Wednesday that the official manufacturing PMI dropped more than anticipated in November to 48 compared to October's 49.2.
As per Procurement Resource, the National Bureau of Statistics in China released data based on a monthly analysis stating that factory activities contracted at a steeper pace in November as a result of distending lockdowns caused by the rising number of COVID cases. Since the gauge for new export orders was in contraction for the fourth consecutive month, it implied that the global need for Chinese products persisted in declining. In order to deal with the situation, the market desperately seeks policies that boost employment and balance domestic demand.