London Daily

Focus on the big picture.
Friday, Oct 24, 2025

Coronavirus: China manufacturing collapse confirmed as private sector factory survey hits record low

Coronavirus: China manufacturing collapse confirmed as private sector factory survey hits record low

Caixin/Markit manufacturing purchasing managers index (PMI) plunged to 40.3 in February from 51.1 in January. Caixin survey, which focuses on smaller firms, mirrors huge drop in official PMI data, both of which show the impact of the coronavirus on manufacturers

A collapse in China’s manufacturing sector in February was confirmed on Monday, with a new survey of privately-owned producers emphasising the economic damage caused by the coronavirus epidemic.

The Caixin/Markit manufacturing purchasing managers’ Index (PMI), a gauge of sentiment among the country’s smaller factory operators, plunged to 40.3 in February from 51.1 in January.

The weak data will reinforce expectations that China could report negative growth in the first quarter of 2020 for the first time since the Cultural Revolution in the late-1960s and early-1970s. It will also renew calls for Beijing to take more aggressive steps to support the economy.

The survey was well below market expectations for a drop to 46.0 and marks the lowest reading since the survey began in April 2004. It was weaker than 40.9 in November 2008 amid the global financial crisis.

The Caixin index follows Saturday’s release of the official manufacturing PMI, which crashed to a record low of 35.7 in February, below the previous trough of 38.8 reached in November 2008 at the start of the global financial crisis, the National Bureau of Statistics said.

The survey for the official gauge covers more larger and state-owned firms, while the Caixin survey covers smaller firms. A reading below 50 means activity in the manufacturing sector is contracting. The further below 50 the index falls, the larger the contraction.

Factories in China traditionally close during the Lunar New Year holiday, but this year the shutdown was extended in an effort to contain the coronavirus outbreak. Manufacturers are now struggling to resume operations, with many workers unable to return due to continued travel restrictions.

“The sharp decline was due to stagnant economic activity across the country disrupted by the pneumonia epidemic caused by a novel coronavirus,” said Zhengsheng Zhong, chairman and chief economist at CEBM Group. “Both the sub-indices for output and total new orders plummeted into contractionary territory and hit their lowest levels on record.



“Supply chains came to a standstill as businesses extended the Lunar New Year holiday and multiple local governments implemented restrictions on transportation and the movement of people in efforts to control the epidemic.”

The data were collected between February 12 and 21, with Markit saying that the response rate was not affected by widespread factory shutdowns.

The survey showed that average delivery times rose by the fastest pace on record, with the total amount of new work received by Chinese manufacturers also falling by the steepest rate on record. Companies surveyed directly linked the first drop in sales since June last year to the coronavirus, while the level of new export work fell at one of the fastest rates on record, due to shipping restrictions and order cancellations.

“Difficulties in sourcing inputs contributed to the steepest decline in inventories of purchased items for just over 11 years. Concurrently, stocks of finished goods fell for the second month in a row, albeit only slightly,” read a note accompanying the survey’s release.

Firms also struggled to fill labour gaps, with manufacturing employment falling at the quickest rate ever recorded. Firms responded by lowering factory gate prices for the first time in three months, in an effort to boost sales.

“The latest PMI readings were in line with our downbeat expectations but will come as a shock to most analysts, who had anticipated a much smaller hit to business activity from the coronavirus outbreak,” said Julian Evans-Pritchard, China analyst at Capital Economics. “Particularly worrying is the large drop in employment, which dampens the prospects for a swift recovery.”

Even before the PMI data was released, Chinese growth was expected to weaken significantly in the first quarter due to the coronavirus from the 6.0 per cent growth in the fourth quarter, which was already the lowest growth rate in nearly 30 years, due in part to the effects of the trade war with the United States.

“In China, we estimate growth in first quarter real gross domestic product (GDP) could contract by 6 per cent – at a quarterly annualised rate – which is a dip to 3 per cent year-over-year growth,” said Tiffany Wilding, an economist at investment firm Pimco.

“The next-hardest-hit economies will likely be in Asia, especially Singapore, Malaysia and Vietnam in Southeast Asia, and Japan and South Korea in Northeast Asia. We expect economies in Europe and the US will also be affected, with Europe likely hit harder than the US given the region’s higher exposure to exports to China and the greater openness of its economy to global trade.”

Researchers at the East Asia Institute of the National University of Singapore, in a report released on Friday, predicted that the economy could contract by as much as 6.2 per cent in the first quarter.

Under such a scenario, GDP would need to grow by 9.0 per cent in each of the following three quarters to achieve the 5.6 per cent annual growth level required to double the size of the economy from its level in 2010, as per Beijing’s economic goals.

Newsletter

Related Articles

0:00
0:00
Close
Microsoft AI CEO: ‘We’re making an AI that you can trust your kids to use’ — but can Microsoft rebuild its own trust before fixing the industry’s?
China and Russia Deploy Seductive Espionage Networks to Infiltrate U.S. Tech Sector
Apple’s ‘iPhone Air’ Collapses After One Month — Another Major Misstep for the Tech Giant
Graham Potter Begins New Chapter as Sweden Head Coach on Short-Term Deal
Ecuadorian President Daniel Noboa Alleges Poison Plot via Chocolate and Jam
Lakestar to Halt External Fundraising as Investor in Revolut and Spotify
U.S. Innovation Ranking Under Scrutiny as China Leads Output Outputs but Ranks 10th
Three Men Arrested in London on Suspicion of Spying for Russia
Porsche Reverses EV Strategy as New CEO Bets on Petrol and Hybrids
Singapore’s Prime Minister Warns of ‘Messy’ Transition to Post-American Global Order
Andreessen Horowitz Sets Sights on Ten-Billion-Dollar Fund for Tech Surge
US Administration Under President Donald Trump Reportedly Lifts Ban on Ukraine’s Use of Storm Shadow Missiles Against Russia
‘Frightening’ First Night in Prison for Sarkozy: Inmates Riot and Shout ‘Little Nicolas’
White House Announces No Imminent Summit Between Trump and Putin
US and Qatar Warn EU of Trade and Energy Risks from Tough Climate Regulation
Apple Challenges EU Digital Markets Act Crackdown in Landmark Court Battle
Nicolas Sarkozy begins five-year prison term at La Santé in Paris
Japan stocks surge to record as Sanae Takaichi becomes Prime Minister
This Is How the 'Heist of the Century' Was Carried Out at the Louvre in Seven Minutes: France Humiliated as Crown with 2,000 Diamonds Vanishes
China Warns UK of ‘Consequences’ After Delay to London Embassy Approval
France’s Wealthy Shift Billions to Luxembourg and Switzerland Amid Tax and Political Turmoil
"Sniper Position": Observation Post Targeting 'Air Force One' Found Before Trump’s Arrival in Florida
Shouting Match at the White House: 'Trump Cursed, Threw Maps, and Told Zelensky – "Putin Will Destroy You"'
Windows’ Own ‘Siri’ Has Arrived: You Can Now Talk to Your Computer
Thailand and Singapore Investigate Cambodian-Based Prince Group as U.S. and U.K. Sanctions Unfold
‘No Kings’ Protests Inflate Numbers — But History Shows Nations Collapse Without Strong Executive Power
Chinese Tech Giants Halt Stablecoin Launches After Beijing’s Regulatory Intervention
Manhattan Jury Holds BNP Paribas Liable for Enabling Sudanese Government Abuses
Trump Orders Immediate Release of Former Congressman George Santos After Commuting Prison Sentence
S&P Downgrades France’s Credit Rating, Citing Soaring Debt and Political Instability
Ofcom Rules BBC’s Gaza Documentary ‘Materially Misleading’ Over Narrator’s Hamas Ties
Diane Keaton’s Cause of Death Revealed as Pneumonia, Family Confirms
Former Lostprophets Frontman Ian Watkins Stabbed to Death in British Prison
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
Outsider, Heroine, Trailblazer: Diane Keaton Was Always a Little Strange — and Forever One of a Kind
Dramatic Development in the Death of 'Mango' Founder: Billionaire's Son Suspected of Murder
Two Years of Darkness: The Harrowing Testimonies of Israeli Hostages Emerging From Gaza Captivity
EU Moves to Use Frozen Russian Assets to Buy U.S. Weapons for Ukraine
Europe Emerges as the Biggest Casualty in U.S.-China Rare Earth Rivalry
HSBC Confronts Strategic Crossroads as NAB Seeks Only Retail Arm in Australia Exit
U.S. Chamber Sues Trump Over $100,000 H-1B Visa Fee
Shenzhen Expo Spotlights China’s Quantum Step in Semiconductor Self-Reliance
China Accelerates to the Forefront in Global Nuclear Fusion Race
Yachts, Private Jets, and a Picasso Painting: Exposed as 'One of the Largest Frauds in History'
Australia’s Wedgetail Spies Aid NATO Response as Russian MiGs Breach Estonian Airspace
McGowan Urges Chalmers to Cut Spending Over Tax Hike to Close $20 Billion Budget Gap
Victoria Orders Review of Transgender Prison Placement Amid Safety Concerns for Female Inmates
U.S. Treasury Mobilises New $20 Billion Debt Facility to Stabilise Argentina
French Business Leaders Decry Budget as Macron’s Pro-Enterprise Promise Undermined
Trump Claims Modi Pledged India Would End Russian Oil Imports Amid U.S. Tariff Pressure
×