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China’s Economic Activity Weakens in August Amid Delta Outbreak

Published 08/30/2021, 09:09 PM
Updated 08/30/2021, 09:36 PM
© Reuters.  China’s Economic Activity Weakens in August Amid Delta Outbreak

(Bloomberg) -- China’s economic activity weakened in August as an outbreak of the delta virus variant curbed consumer spending and travel, while surging materials costs and supply-chain woes hindered production.  

The official manufacturing purchasing managers’ index fell to 50.1 from 50.4 in July, the National Bureau of Statistics said Tuesday, slightly lower than the 50.2 median estimate in a Bloomberg survey of economists. 

The non-manufacturing gauge, which measures activity in the construction and services sectors, slumped to 47.5, signaling a contraction for the first time since March 2020. 

China imposed stringent measures, including travel curbs, mass testing and quarantines, for about a month to bring a new wave of Covid cases under control. The outbreak was the most widespread since the initial flareup in 2020, sweeping across nearly 50 cities in 17 provinces in the country. Confidence among businesses weakened and consumers cut back on spending after authorities rushed to close tourist sites, call off cultural events and cancel flights. 

Beyond the virus outbreaks, the economy’s recovery is also showing signs of faltering in the wake of recent regulatory crackdowns and weak demand at home. The central bank has signaled it may provide more targeted support for some industries, while the government has pledged to accelerate fiscal spending in the second half of the year, helping to cushion growth.

Other key highlights from the PMI data:

  • New orders sub-index dropped below 50 to 49.6; new export orders index declined to 46.7 from 47.7
  • Sub-index for manufacturing jobs was unchanged at 49.6; non-manufacturing employment decreased to 47

©2021 Bloomberg L.P.

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