China's Covid Lockdowns Hit Industrial Production

As China continues to battle coronavirus outbreaks with draconian lockdowns, industrial production in the country has been hit by the measures. For the second month in a row, both the Caixin Manufacturing Purchasing Managers Index and the Manufacturing Purchasing Managers Index by the National Bureau of Statistics read below 50, indicating a contraction in factory activity.

As seen in the indices, the initial Covid-19 outbreak in China and ensuing lockdowns caused factory activity to screech to a halt. However, as the country initially followed its zero Covid strategy successfully, factory production recovered quickly and continued an expansion course throughout 2020 and until mid-2021. Global trade turmoil in the later half of 2021 and into 2022 saw Chinese manufacturing PMIs hover around the 50-point mark again. The latest developments finally saw the indices tumble, from 48.1 and 49.5 in March to only 46.0 and 47.4 in April, with potential ripple effects for global trade.

Whenever the index reads above 50, it indicates that the sector is growing. Readings below 50 signal a contraction. The official government PMI only looks at larger manufacturers, while the Caixin index considers small and medium-size enterprises.