China’s manufacturing last month plunged by an even wider margin than expected after efforts to contain a virus outbreak shut down much of the world’s second-largest economy, an official surveyed showed on Saturday.
The monthly purchasing managers’ index (PMI) issued by the Chinese National Bureau of Statistics and the China Federation of Logistics & Purchasing industry group fell to 35.7 from January’s 50 on a 100-point scale, with numbers below 50 indicating activity contracting.
A sub-measure of imports plummeted, highlighting the effects of COVID-19 in Asia, and on other suppliers of components and raw materials to factories in China, which assemble most of the world’s smartphones, toys, home appliances and other consumer goods.
“Supply chains are likely to remain disrupted even if China’s factories go back to full production,” due to spreading travel bans and other antivirus controls abroad, ING Bank NV economist Iris Pang (彭藹嬈) said in a report.
It was “incredibly unlikely” that the global flow of goods would recover even by next month, Pang said.
The PMI decline was widely anticipated after the Chinese government extended the Lunar New Year holiday to keep factories and offices closed, but the figure was even more severe than many forecasters expected.
Many analysts expected a result in the low 40s, which already would have been the lowest since the PMI first was issued in 2002.
Other major economic indicators “are expected to decline significantly” in the first quarter, government economist Zhang Liqun (張立群) said in a statement.
The PMI highlighted the bigger blow suffered by the small, mostly private companies that are the country’s economic engine, produce goods for global brands and supply components for smartphones and other consumer electronics.
A measure of production fell to 26.1 among small enterprises, while the measure for bigger companies was 28.3.
The measure for imports fell to 31.9 from 57 in January.
The official PMI draws on a sample of companies that is weighted toward larger, state-owned companies that serve the Chinese market. A separate PMI with more private companies and exporters is to be released today by a Chinese business magazine.
The previous lowest PMI readings were in the mid-40s following the 2008 global financial crisis.
Regulators say Chinese industry is reviving, but activity still is weak.
The 18 million small, mostly private companies that account for the bulk of industrial activity and employment are back to operating at one-third of normal levels, officials said on Thursday.
Chinese Deputy Minister of Industry and Information Technology Zhang Kejian (張克儉) said that activity is increasing by about 1 percent per day.
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