China’s factory activity stalls as virus risks grow

Growth in China’s factory activity faltered in January, an official survey showed, as export orders fell and an outbreak of a new virus added to risks facing the world’s second-largest economy.

The Purchasing Managers’ Index (PMI) fell to 50.0 in January from 50.2 in December, China’s National Bureau of Statistics (NBS) said on Friday. The reading was in line with analysts’ forecasts and hit the neutral 50-point mark that separates growth from contraction on a monthly basis.

While the PMI showed activity in some parts of the sector holding up, economists are doubtful the survey provides a meaningful read on the economy given recent developments with the coronavirus and distortions from the Lunar New Year break.

More than 200 people have died from the virus in China in the past few weeks, prompting widespread transport curbs and tough public health measures that are weighing heavily on the travel, tourism and retail sectors. Analysts say the fast-spreading virus could hurt first-quarter economic growth.

“I would disregard today’s release,” said Raymond Yeung, Chief Economist for Greater China at ANZ, in an email to Reuters.

“The figure certainly overrates the economic outlook as it does not reflect the interruption due to the outbreak,” he said.

China’s economic growth cooled to its weakest point in nearly 30 years in 2019 amid a bruising trade war with the United States.