CHINA’S factory activity edged down this month, showed official figures today, but slightly exceeded expectations as businesses struggled with sporadic disruptions due to coronavirus outbreaks.

The Purchasing Managers’ Index – a key gauge of manufacturing activity – in the second-largest economy in the world inched down to 50.1, just above the 50-point mark separating growth from contraction.

National Statistics Bureau (NBS) data shows a slight decrease from the reading of 50.3 last month, when activity was buoyed by an easing of commodity prices.

“Faced with a complex and severe economic environment and scattered outbreaks… China’s economy continued to recover and develop, though growth levels somewhat declined,” said NBS statistician Zhao Qinghe.

The bureau reading contrasted with a private survey of smaller manufacturers, which fell by 1.8 points to 49.1.

“The slowdown is particularly severe for the small firms,” said Zhiwei Zhang, who is chief economist at Pinpoint Asset Management.

The NBS figures have hovered in growth territory since November, following a seven-month downward trend in part due to power shortages and high raw material prices.

The reading fell below 50 for two months in September and October, as the power crunch hit business operations.

The non-manufacturing business activity index stands at 51.1 this month, a contraction of 1.6 points from the previous month.

The decline is due in part to a slowing recovery in the services sector and a seasonal slowdown in construction.

Analysts warned that domestic coronavirus outbreaks will likely continue to weigh on the economy, as sporadic outbreaks dent consumer confidence and cause business shutdowns.

Beijing is on high alert for new outbreaks as it prepares to host next month’s Winter Olympics.

Authorities locked down an area neighbouring Beijing this week, following a handful of reported cases. They appear to not have publicly announced restrictions that confined about 1.2 million people to their homes in Xiong’an New Area. – AFP, January 30, 2022.