China’s factory activity posts record contraction as coronavirus bites
The announcement comes as the epidemic has rapidly spread to a growing number of countries.Updated: Feb 29, 2020 07:52 IST
China’s manufacturing activity fell to its lowest level on record in February as official data on Saturday confirmed the massive damage the deadly coronavirus epidemic has caused to the world’s second-largest economy.
The announcement comes as the epidemic has rapidly spread to a growing number of countries, pushing stock markets to their lowest levels since the 2008 global financial crisis over fears that the coronavirus could wreak havoc on the world economy.
Analysts have warned that China’s economic growth will likely take a major hit in the first quarter, and Saturday’s data was the first glimpse at the damage the virus has caused to industries across the country.
The Purchasing Managers’ Index (PMI), a key gauge of activity in China’s factories, was at 35.7 points in February, well below the 50-point mark that separates growth and contraction every month.
This was down from 50 points in January and the worst level since China began recording the figure in 2005.
It was also well below expectations of a smaller contraction, at 45.0, according to a Bloomberg poll of analysts.
It was the first official economic indicator published for the month of February, showing the devastating impact of the epidemic on China’s economy -- with fallout likely to be seen around the world.
The National Bureau of Statistics said the auto and specialised equipment industries were hit hard, but the effect was “more severe” in the non-manufacturing area.
“There was a plunge in demand for consumer industries involving gatherings of people, such as transportation, accommodation, catering, tourism, and resident services,” the NBS said in a statement.
Non-manufacturing activity was at an abysmal 29.6 points in February, down from 54.1 points in January.
Authorities have taken drastic steps to contain the virus, curbing the movement of people, temporarily closing factories across the country and quarantining central Hubei province, a key industrial region where the epidemic first appeared.
The government has encouraged companies to progressively return to work as the number of new cases has been dropping in the past 10 days.
“Although the new coronavirus pneumonia epidemic has caused a larger impact on production and operations of Chinese enterprises... currently the epidemic has come under initial containment, and the negative impact on production is gradually weakening,” the NBS said.