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China’s Official Manufacturing PMI Sees Sharpest Decline on Record in February

As a result of the coronavirus outbreak, factory activity in China contracted at the steepest pace ever recorded during February. China’s Caixin General Manufacturing PMI declined to 40.3 in February from 51.1 in January, falling well below the 50-threshold indicating contraction.

The official PMI reading also came in far worse than expected, with economists having anticipated a reading of 45.7 instead. The strict lockdown measures enforced across several regions of the country have resulted in closure of factories even as travel restrictions keep workers from resuming work in many parts of China.

So far, around 80,000 people across China have been infected while the death toll nears 3,000. Both supply and demand have dampened, dealing a double blow to its manufacturing sector which was just showing some signs of recovery following the signing of the US-China phase one trade deal in January.

Manufacturing output fell sharply to 28.6 in February from 52 in January while new business slid to 34.9 during February from 51.9 in the previous month. On the positive side, the Chinese government has stepped in with some support measures which have helped business confidence soar to the highest level seen in five years, notwithstanding the poor performance seen in this sector in February.

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Arslan Butt
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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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