Thought for the day

China Lockdowns Impacted on 41% of Companies in July, but Small Rays of Sunshine are Appearing


 
12 August 2022
 
The July Sales Managers Index continues to illustrate the heavy toll being taken on the Chinese economy by continuing Government attempts at preventing the spread of Covid. The impact, even in areas not locked down, has been severe, and continues to cause difficulties for many companies, but business confidence is slowly returning, particularly in the Manufacturing sector. The Manufacturing Business Confidence index (which relates to confidence in the future, not current circumstances) rose from 50.2 in June to a significantly higher 51.7 level in July.

As already noted, Manufacturing has been badly affected with factories unable to operate entirely closed off from supply chains, and current activity remains depressed. The Manufacturing Market Growth Index came in close to a 25 month low in June, and although registering marginally better numbers in July, remained well below the 50 "no-growth". The Sales Growth Index remains very low in relation to the past, recording a 26 month low point in July. However, this index also remains over the 50 no growth level.

Despite these rather sombre numbers, the Staffing Index rebounded in July to a positive 50.2 reading. This is particularly significant as the Staffing Index records year on year growth, as opposed to month on month changes.

The Services sector did little better, with all the growth related indexes below or marginally above the 50 level.

The joint Manufacturing & Services overall Sales Managers Index perhaps sums up the situation best, recording movement between June to July from 49.6 to 49.7. July was a marginally better month, but overall business conditions remain sitting on the fence poised between growth and decline.  See more data...


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