Economic activity in China has expanded for the first time in four months as disruptions caused by the abrupt end of its zero-Covid policy appears to be fading.
The official purchasing managers’ index (PMI) for manufacturing, which measures activity at factories, jumped to 50.1 in January from 47 in December, according to the National Bureau of Statistics.
It’s the first time the gauge has crossed the 50-point mark since September. A reading above 50 indicates expansion, while anything below that level shows contraction.
The official non-manufacturing PMI, which tracks activity in the services and construction sectors, surged to 54.4 in January from 41.6 in December, also marking its first expansion in four months. This is a sign that China’s Covid “exit wave” is coming to an end, said analysts from Nomura in a research report. “Looking to February, we expect both the manufacturing and non-manufacturing PMIs to rise further, as more people adapt to living with Covid,” they said Tuesday, adding that manufacturing activity will also rebound further following the Lunar New Year holiday.
The official PMI survey mainly covers larger businesses and state-owned companies. The Caixin PMI survey, which will be released later this week, is focused on small and medium-sized enterprises. China scrapped most of its pandemic restrictions in early December, effectively ending its three-year-long zero-Covid policy. But the abrupt change in policy caught the public off guard, leading to the rapid spread of infections.
The Covid surge hit factories and consumer markets, as people were driven indoors and factories were forced to shut due to fewer people working. But it appears the chaos might be over.
“The official PMIs add to evidence of a rapid rebound in economic activity this month as disruption from the reopening wave faded,” said Sheana Yue, China economist at Capital Economics.
