The major forex centres in Asia are closed today, as Japan, Singapore, Hong Kong, Australia, and New Zealand markets are all closed. China is also out today.
Therefore, the market reaction to the weak PMI data from China over the weekend is not as strong as would be expected. The Renewed outbreak in China clearly contributed to the weak PMI readings.
While this set of results will not be a positive for China trades, China-proxy trades, oil, and other commodities, for traders and markets it will not be a surprise.
Breaking down the data, the official NBS Manufacturing PMI was down to 47.0 in December 2022 from 48.0 in the previous month, pointing to the third straight month of drop, amid the rapid spread of COVID infections that hurt production following Beijing’s abrupt relaxation of pandemic measures.
The latest print also marked the steepest pace of contraction in factory activity since February 2020, with output (44.6 vs 47.8 in November), new orders (43.9), and export sales (44.2 vs 46.7) all falling at faster rates.
Also, buying activity declined for the third month running, with the pace of fall the most in eight months (44.9 vs 47.1); while a decline in employment accelerated sharply (44.8 vs 47.4). At the same time, delivery time lengthened substantially (40.1 vs 46.7).
On the price front, input cost rose for the fourth month in a row and at a steeper rate (51.6 vs 50.7); while a fall in output charges extended for the eighth successive month despite the fall softening from the prior month (49.0 vs 47.4
China’s services activity contraction also deepened in November. The official non-manufacturing PMI in December stood at 41.6 versus 46.7 in November, according to NBS data. About 61.3 percent of the surveyed firms said they felt a sizable impact from the epidemic, up 10 percentage points from that of November.
The NBS said the upcoming Spring Festival holidays represent a favourable factor, and the flight volumes of both domestic and international services were recovering significantly with the PMI reading for civil aviation business activity exceeding 60.
Other sectors such as telecom and broadcast, internet and information services, financial and insurance services all remained in expansionary territory.
While widespread lockdowns are a thing of the past self-imposed isolation and illness have seen impacts on the Chinese economy as workers stay home and others (at the margin) avoid going out and about.
