The Caixin/Markit China manufacturing purchasing managers’ index is down from 50.3 in July to 49.2 in August
China‘s manufacturing levels saw a fall in output for the first time since early during the pandemic in what could be a concerning signal for the worldwide recovery.
The country made a resurgence last year thanks to rising output in factories, however, thanks to the spiralling cost of raw materials and supply bottlenecks, the industry is coming under some pressure.
Additionally the Delta variant is causing a slowdown which is holding back the output of China factories.
The Caixin/Markit China manufacturing purchasing managers’ index is down from 50.3 in July to 49.2 in August, failing to meet economists’ forecasts of 50.2. A reading below 50 shows that the sector is contracting.
In an effort to deal with the Delta variant China imposed strict measures on its people, but this caused transport delays and resulted in additional costs.
Employers stopped hiring at the same rate as backlogs of work increased in May.
Freya Beamish, chief Asia economist at Pantheon Macroeconomics, said: “Domestic and foreign Covid resurgence was fingered by panellists as the culprit. Suppliers’ performance also deteriorated, putting upward pressure on prices and reinforcing our call that producer prices inflation hasn’t quite peaked yet. The authorities will be biting their nails, with the employment index signalling a fall in employment in August, though small, after little change in July.”
Beamish added: “The index should rebound this month, but we remain more broadly worried about the prospects going forward.”
