China’s largest factories have been going through one of the worst months since the start of the coronavirus pandemic, indicating that the world’s second largest economy is slowing down.
A government survey on manufacturing released over the weekend showed a decline for the second straight month, to 49.2 in October from 49.6 in September.
“Manufacturing in China has been hit hard, such as by the energy crisis, shipping delays and rising inventories.” TD Securities, head of emerging markets strategy in Asia and Europe, in a research note on Monday. “While we could see some relief for manufacturers in the coming months, the supply crisis looks well established,” he said.
The global shipping crisis has wreaked havoc worldwide, with many large companies recently acknowledging that full ports, missing parts and higher costs are hurting businesses. It is a concern that will be borne by the last quarter of the year, a critical holiday period for many retailers.
Economists at Capital Economics said the average of the two surveys still showed that more companies were reporting a decline in activity rather than an increase, indicating that total output was declining.
“Survey respondents noted that reduced power supply, material shortages and high input costs have hampered production,” Sheana Yue, an assistant economist at Capital Economics, wrote in a note Monday.
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