Official gauges of China’s factory and nonfactory activity plunged to record lows in February as the domestic economy struggled to resume normal production amid the coronavirus epidemic.
The official manufacturing purchasing managers index tumbled to 35.7 in February from 50 in January, indicating a deep contraction. February’s reading from the National Bureau of Statistics released Saturday was the first official data for a full month of economic activity in China since the coronavirus began affecting the economy in late January.
The 50 mark separates expansion from contraction for this key leading indicator. The index dropped to 38.8 in November 2008, when the financial crisis gripped the world.
As for the broader view, China’s nonmanufacturing PMI, also released on Saturday, sank to a record low of 29.6 in February from 54.1 in January. This includes key sectors such as retail, aviation, real estate and construction.
The February result came in far below the median forecast of 43 by economists surveyed by the Wall Street Journal.
The trade war had kept the factory index in contraction for most of 2019 before a late-year rebound. Notably, economists are waiting for March’s numbers before they have a clean reading of the economic impact without the distortions of the Lunar New Year.
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Saturday’s results show a “relatively large impact” from the epidemic, Zhao Qinghe, an analyst with the statistics bureau, said in a statement accompanying the data release, according to the Wall Street Journal. March’s readings should improve because of authorities’ efforts to help companies, especially manufacturing firms, resume production, he said.
“The situation on the ground [in China] is materially worse than what has come out in the media,” Leland Miller, CEO of the China Beige Book, a research firm that collects Chinese company viewpoints, told MarketWatch in an interview.
“Our flash data shows nearly every major measurement is in contraction,” he said. “I do always stress that this is early data.”
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February 29, 2020 at 11:52PM
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China purchasing indexes sink to record lows as coronavirus epidemic hits economy - MarketWatch
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