China Manufacturing Gauge Fell to Record Low at 40.3 in February

A private gauge of China’s manufacturing activity fell to a record low in February, tallying with official data that showed economic activity has been paralyzed by the coronavirus epidemic.

The Caixin China manufacturing purchasing managers index fell to 40.3 in February, the lowest reading since the survey began in April 2004, Caixin Media Co. and research firm Markit said Monday. The result, down from 51.1 in January, was well below the 50 mark that separates expansion in activity from contraction.

Subindexes of production, new orders and staffing levels all fell at the quickest paces since the survey started nearly 16 years ago, Caixin said, as manufacturers heeded the government’s call to extend their Lunar New Year shutdowns to help contain the spread of the virus.

“China’s manufacturing economy was impacted by the epidemic last month. The supply and demand sides both weakened, supply chains became stagnant, and there was a big backlog of previous orders,” said Zhengsheng Zhong, chairman and chief economist at CEBM Group, in the statement accompanying the data.

China’s official manufacturing PMI, released Saturday, fell to a record low of 35.7 from 50.0 in January, the National Bureau of Statistics said. The Caixin PMI more closely tracks small, private manufacturers, while the official index focuses more on large, state-owned firms.

On the bright side, manufacturers surveyed by Caixin said they were confident that output would rise over the next year once restrictions related to the virus are lifted.

Mr. Zhong said the Chinese economy should be able to see a significant rebound when the epidemic is contained and companies accelerate the resumption of business amid more proactive fiscal and monetary policies.
Source: Dow Jones