China Remains Badly Affected By Covid Restrictions


 
Well over 40% of respondents to the October Sales Managers Survey stated they were still affected by city shutdowns.


In the Manufacturing sector, there is confidence that the situation will improve over the next few months, which is encouraging. But both Market and Sales Growth Indexes remained in negative territory, with the former index at a 30 month low, indicating widespread difficulties.

In relation to Covid induced shortages the best news clearly came from the Prices Charged Index, which remained well under the 50 "no growth" level, suggesting that at least the massive price hikes of the Covid period are now over. The low level of the price index also suggests that although Government restrictions are impacting on Manufacturing, they are not sufficiently widespread to create severe shortage and hence generate price rises.

The apparent stagnation of the Manufacturing sector, was more than mirrored in the large Services sector of business activity. Both Business Confidence and Staffing Indexes fell to the lowest levels ever recorded by the Sales Managers survey in September, and the October survey provided little improvement for the former, and a still negative reading for the latter.

Three of the Services sector business growth related indexes recorded negative index values below the 50 line, suggesting China has some way to go before it can benefit from overall economic growth at levels anywhere near to those recorded pre-Covid.

Measured over all sectors, the Chinese economy still does not look well placed, with Covid restrictions still impacting negatively on many of the companies in our survey.
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