China’s 2022 economic growth is one of the worst on record
Momentum from an economic recovery in China early this year has faded further, with activity in the services industry and construction sector dropping to its weakest level since December 2022.
CNN has reported that the Chinese yuan weakened in onshore trading to its lowest level since last November, at around 7.26 per dollar. The currency has slumped 5 percent this year as sentiment soured regarding China’s growth prospects, as well as the widening gap between Chinese and US interest rates.
The non-manufacturing Purchasing Managers’ Index, an important reading of sentiment in the services and construction sectors, fell to 53.2 in June from 54.5 in May, CNN reported citing data from the National Bureau of Statistics.
The sub-index for services activity also fell to a six-month low, reaching 52.8 in June. The services sector is crucial to China’s economy. It accounts for 58 percent of the GDP and 48 percent of employment.
In March, the non-manufacturing PMI had surged to its highest level in nearly 12 years, boosted by a resurgence in consumer activity as the country emerged from three years of Covid lockdowns.
But momentum has slowed in recent months.
“The main engine of growth is spluttering,” said Robert Carnell, regional head of research for Asia-Pacific at ING Group.
“Official PMI data confirms that the re-opening surge in the service sector is subsiding,” he said.
The services and construction sector, spurred by consumer spending, had been keeping China’s economy growing in the first half of this year as the manufacturing sector lagged behind, he said.
Friday’s data confirms that the initial surge in economic expansion had contained a lot of pent-up demand, which has not continued.
“Domestic tourism and dining out have been making up for lost time in the early part of the year. But there is only so long that this can go on,” Carnell said.
[With Inputs from IANS]
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