China’s official manufacturing gauge dropped to 35.7 points in February, far below the 50-point line that divides growth from contraction. January’s reading was 50. It is the lowest figure since China began recording the Purchasing Managers’ Index in 2005.
Analysts had not seen it coming. A Bloomberg poll of analysts had pointed to a milder reading of 45.0.
The number was the first official economic indicator published for February, and it showed how heavily the deadly coronavirus epidemic has hit the world’s second-largest economy. The fallout is likely to reach other countries.
Services fared worse
Outside the factories, things looked even bleaker. Non-manufacturing activity came in at 29.6 points, down from 54.1 in January.
The National Bureau of Statistics said the auto and specialised equipment industries took a hard hit, but the effect was “more severe” in non-manufacturing. “There was a plunge in demand for consumer industries involving gatherings of people, such as transportation, accommodation, catering, tourism, and resident services,” the bureau said in a statement.
Containment steps
Authorities have curbed the movement of people, closed factories across the country for a time and put central Hubei province, a key industrial region where the epidemic first appeared, under quarantine.
Lately the government has been urging companies to resume work in stages, as the number of new cases has fallen over the past 10 days. The bureau struck a cautious note. “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,” it said.
