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China’s Manufacturing Activity to Contract at Fastest Pace Since Financial Crisis of 2008-09

According to a recent Reuters poll, manufacturing activity in China is expected to have contracted at the steepest rate in more than a decade on account of the lockdown due to the coronavirus outbreak. Official manufacturing PMI in China could fall to 46 in February from 50 in the previous month, falling from stagnation into contraction below the 50-threshold.

A contraction in the manufacturing sector is likely to weigh heavily on China’s economic growth which is likely to witness a decline during the first quarter of this year. In a bid to contain the spread of the virus, the government had enforced shutdowns across several Chinese provinces, leading to a closure of factories and workplaces which are likely to impact the manufacturing activity during February.

Even as senior government officials try to urge factories to reopen and resume production, the fear of spread of infections still lingers and it is expected to take some time before manufacturing returns to normal levels once again. So far, the coronavirus has infected nearly 80,000 people across China while the death toll has crossed 2,700.

Over the past few days, however, there has been a slowdown in the rise of infections being reported in China. Several international travel restrictions still remain in place and are likely to continue as a result of the spread of infections worldwide. This is likely to slowdown the return of migrant workers two major manufacturing hubs of China, like the Hubei province, which was the epicenter of the coronavirus outbreak.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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