Factories in China have witnessed a reduced activity on account of the emergence
of a recent coronavirus wave in northern China, AFP reported.

The purchasing managers’ index (PMI), a key gauge of manufacturing
activity, came in at 51.3 this month, as the world’s second-largest economy tightened
COVID-19 precautions ahead of the Lunar New Year.

In December, the figure reached 51.9, still above the 50-point mark
separating growth from contraction.

Also Read | WHO team visits wet market in Wuhan to trace origin of coronavirus

“Recently, local clusters of the epidemic emerged successively in
many places across the country, and the production and operations of some
enterprises were temporarily affected,” said National Bureau of Statistics
(NBS) senior statistician Zhao Qinghe, AFP reported. 

Qinghe added that Lunar New Year is traditionally an “off-peak season” for
the manufacturing industry.

Although domestic consumption picked up speed, latest data indicated
that business climate will hover over low numbers for small firms. Export
demand also took a hit as the pandemic continued to spread like wildfire.

China’s non-manufacturing PMI saw a larger drop to 52.4, from 55.7 last
month, taking a bigger hit from the domestic virus resurgence.

Industries including accommodation and catering saw a “more
significant” drop in activity, while the construction industry went into
an off-season.

Also Read | In a span of 15 days, India inches closer to four million inoculation mark

The fall in the PMI can be credited to the new COVID-19 wave, including
reimposing social distancing rules, lockdowns and travel bans in some parts of
China, Nomura’s chief China economist Lu Ting told AFP.

“The inevitable, seasonal rise in population mobility and family
gatherings in coming weeks, albeit likely much smaller than their pre-pandemic
levels, may keep these Covid-19 prevention measures in place for a longer
time,” he added.

Accordingly, non-manufacturing activity could dip further in February,
he said.

But with migrant workers encouraged to stay in the cities where they
work this year instead of returning home, manufacturing PMI might rebound
slightly in the coming month, said Lu.