People shop in a Huawei store in Beijing on January 29, 2021. Photo: AFP/Greg Baker

Factory activity in China slowed slightly in January, official data showed Sunday, as the country rushed to stamp out a recent coronavirus wave in the north.

The purchasing managers’ index (PMI), a key gauge of manufacturing activity, came in at 51.3 for the month, as the world’s second-largest economy tightened Covid-19 precautions ahead of the Lunar New Year.

The figure was slightly below December’s 51.9, though still above the 50-point mark separating growth from contraction.

“Recently, local clusters of the epidemic emerged successively in many places across the country, and the production and operations of some enterprises were temporarily affected,” said National Bureau of Statistics senior statistician Zhao Qinghe.

Zhao added that the period around the Lunar New Year was traditionally off-peak for manufacturing.

The latest data indicated that the business climate remains weak for small firms, though domestic consumption picked up ahead of the festive period.

Export demand slowed after Christmas as the pandemic continued spreading worldwide, the NBS added.

The non-manufacturing PMI saw a larger drop to 52.4, from 55.7 last month, taking a bigger hit from the domestic virus resurgence.

Industries including accommodation and catering saw a “more significant” drop in activity, while the construction industry went into an off-season.

The fall in the PMI reflects weakening growth momentum due to government measures to contain the new wave, including tightening social distancing rules, re-imposing lockdowns and travel bans in some parts of China, Nomura’s chief China economist Lu Ting said.

“The inevitable, seasonal rise in population mobility and family gatherings in coming weeks, albeit likely much smaller than their pre-pandemic levels, may keep these Covid-19 prevention measures in place for a longer time,” he added.

Accordingly, non-manufacturing activity could dip further in February, he said.

But with migrant workers encouraged to stay in the cities where they work this year instead of returning home, manufacturing PMI might rebound slightly in the coming month.

AFP