Beijing: China's manufacturing plunged in February as anti-virus controls shut down the world's second-largest economy, but companies are confident activity will revive following government stimulus efforts, according to two surveys.
The data add to growing signs of the disease's cost. Global stock markets have tumbled more than 10 per cent since mid-February as outbreaks in Iran, Italy and South Korea fuelled fears the virus will spread.
Chinese factory activity fell at its fastest rate and to its lowest level on record as anti-disease efforts closed factories and disrupted supplies, according to surveys by a business magazine, China's statistics agency and an industry group.
A monthly purchasing managers' index released on Monday by Caixin magazine fell to 40.3 from January's 51.1 on a 100-point scale on which numbers below 50 show activity contracting.
Despite that, business confidence rose to a five-year high after the ruling Communist Party launched efforts to revive industry with tax cuts and other aid, Caixin said.
"Manufacturers were confident that output would rise over the next year,” the magazine said in a statement.
A separate PMI released on Saturday by the National Bureau of Statistics and the China Federation of Logistics & Purchasing fell to 35.7 from January's 50.
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The data suggest “the worst is now likely behind us” in China, said Citigroup economists in a report.
"The poor data may accelerate policy interventions to repair the economy," they wrote. However, the impact of job losses "will take longer to reverse,” said Julian Evans-Pritchard of Capital Economics in a report.
Beijing has cut a key interest rate and promised tax breaks, low-cost loans and other aid. Local officials have orders to help millions of employees get back to work while preventing a rebound in infections.
Economic growth fell to a multi-decade low of 6.1 per cent last year. Forecasters already expected this year's growth to decline below 6 per cent.
They say the longer it takes to control the virus, the bigger the stimulus will have to be to hit official growth targets. That might push up already high debt levels.
Manufacturing activity normally would rebound in February as factories reopen and replenish raw materials following the Lunar New Year, when many shut down for two weeks or more.
(IANS Report)
