China’s economic activity contracted sharply in April as the lockdown of Shanghai and other areas around the country to contain a widespread COVID-19 outbreak closed factories, snarled roads and stopped people from consuming, escalating concerns about further disruption to global supply chains.
The slump was widespread in April, with factory output contracting further and services demand much weaker than forecast. The purchasing managers indexes are the first official April data and show the extent of the damage to the economy due to the outbreak and the government’s “COVID-zero” policies.
Factory activity fell to the lowest level in more than two years, with the official manufacturing PMI dropping to 47.4 from 49.5 in March, according to data released by the National Bureau of Statistics on Saturday. That was largely in line with the median estimate of economists.
The nonmanufacturing gauge, which measures activity in the construction and services sectors, plunged to 41.9 from March’s 48.4, hitting the lowest since February 2020 and well below the consensus forecast of 46. A reading above 50 indicates expansion, while anything under indicates contraction.
The deterioration in manufacturing activities was due to sharper declines in both production and demand, the statistics bureau said in a statement. The latest COVID-19 outbreaks, which have hit multiple places across the country, have forced some enterprises to reduce or even stop production.
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