Live news: Chinese manufacturing contracts faster than expected as lockdowns bite

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China’s manufacturing sector contracted faster than expected in November, as widespread lockdowns to combat record Covid-19 cases slowed output in the world’s second-largest economy.

The manufacturing sector purchasing managers’ index came in at 48 for the month, below the 50-point threshold that separates contraction from expansion. Analysts had forecast a reading of 49.

It was the third consecutive monthly contraction and the lowest reading since April.

A sub-index for production fell by 1.8 points, while new orders fell to 46.4, the lowest level since Shanghai’s lockdown in April and May, suggesting that China’s coronavirus restrictions had muted demand.

Beijing’s zero-Covid policy has damped economic performance, with analysts saying the country’s already low goal of 5.5 per cent annual gross domestic product growth was well out of reach months ago.

But renewed Covid lockdowns this month to combat climbing cases have dented manufacturing output, despite government efforts to bolster demand in the property sector by increasing credit supply for new projects. Policymakers have also struggled to boost consumer demand, weakened by the lingering prospect of further lockdowns.

“China’s official PMIs came in weaker than expected, suggesting that the resurgence of Covid cases continue to weigh on the economic performance,” said Hao Zhou, chief economist at Guotai Junan International. “Pressure on growth is mounting against the backdrop of sporadic Covid outbreaks, prolonged property downturn and external disturbances.”

The official non-manufacturing PMI, which includes the service industry and other sectors such as forestry and agriculture, came in at 46.7, well into contraction territory.

Read More: Live news: Chinese manufacturing contracts faster than expected as lockdowns bite

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