J.P. Morgan: Rising Covid-19 cases are weighing on China PMIs

J.P. Morgan: Rising Covid-19 cases are weighing on China PMIs

4 april 2022

China
Corona-virus (05)

The impact of the latest Covid-19 outbreak in China was clearly reflected in March’s Purchasing Managers’ Index (PMI) data, with both manufacturing and services activity falling into contractionary territory.

The official manufacturing PMI declined to 49.5, while the services sectors were hit much harder, with the non-manufacturing PMI dropping from 51.6 to 48.4. Against a backdrop of sharply rising Covid cases, Chinese policymakers have implemented stricter lockdown measures in an effort to contain transmission.

While the near-term growth outlook remains uncertain, investors have been somewhat comforted by the prospect of policy easing ahead. If Beijing is to achieve its 5.5% growth target for 2022, more stimulus appears necessary. Further cuts to interest rates are now expected and local government bond issuance will likely accelerate in order to provide fiscal support for infrastructure projects.

04042022 J.P. Morgan

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