China’s business output expectations for the coming year plunged in June to the lowest since Covid-19 erupted more than two years ago, says a new survey.
The drop, to the lowest since 2020, was triggered by concerns over future outbreaks of Covid-19 and the risk they pose for new lockdowns, as well as rising costs, said the S&P Global China Business Outlook.
“Uncertainty around future waves of Covid-19 and further disruption to operations weighed on confidence,” Annabel Fiddes, associate director of economics at S&P Global Market Intelligence, said. “Rising costs, strained supply chains, and greater global economic uncertainty were also seen as headwinds to growth.”
Firms expect inflation to ease and revised down their estimates for profits, S&P said. The net balance of firms projecting higher profits fell from plus 17% in February to plus 6% in June, the lowest in two years, said the report.
Uncertainty over the pandemic has also led businesses to become warier regarding plans to hire, it said. While in February firms forecast a mild rise in future hiring, they now anticipate that workforce numbers will remain unchanged over the coming year, the report said.
Investment intentions also weakened in June with the net balance of firms projecting higher spending on research and development slipping plu 14% in Feburary to plus 10% in June, the report said.
S&P’s Global Business Outlook survey is based on responses from 12,000 manufacturers and service providers in Feburary, June and October.
- By Justin Hamlin