Covid-19: China's curbs send economy reeling to worst since Apr 2020

China’s economy slowed rapidly in April as the costs of both a worsening Covid outbreak and the nation’s stringent approach to eliminating the virus took their toll.  That’s the outlook from Bloomberg’s aggregate index of eight early indicators for this month. The overall gauge fell below the mark that separates improving from deteriorating conditions, and hit the worst level since April 2020.

   

The almost across-the-board contraction in the PMIs marked a turning point for the economy and came as daily Covid cases spiked from around 100 to about 8,000 a day, prompting lockdowns and restrictions across the country.   

The services industry was already suffering in March, with consumer spending contracting by the most since mid-2020. 

For the manufacturing sector, restrictions on road transportation and ports have put a cap on the operations of some firms. Small business confidence dropped to the lowest level in more than two years in April, according to Standard Chartered’s survey of more than 500 smaller firms. Both production and demand at small and mid-sized enterprises saw a “a sharp deterioration” in the month, likely weighing on their profitability and investment appetite. Home sales continued to dive and car sales have dropped so far this month. One bright spot for the economy is that external demand has been strong so far this year.

Xi turns to construction spending as way out

China said it would step up infrastructure construction after a meeting on Tuesday chaired by President Xi Jinping, the latest sign of an all-out effort to bolster an economy that’s been hammered by a widening series of Covid-related lockdowns. The projects are to include airports and other transportation hubs as well as energy and water conservancy projects.  Bloomberg