Chinese manufacturing PMI drops sharply in February - Markit/Caixin

According to the report from Markit/Caixin, efforts to contain the recent outbreak of the coronavirus in mainland China weighed heavily on manufacturing sector performance in February. Production, new work and staffing levels all fell at the quickest rates since the survey began nearly 16 years ago as companies extended their usual Lunar New Year shutdowns to help stem the spread of the virus. Supply chains were also hit heavily, with average delivery times increasing at the quickest pace on record, leading firms to increase their use of current stocks. However, firms anticipate a recovery in production over the next year due to expectations that production will be ramped up once any coronavirus-related restrictions are lifted. Notably, the degree of positive sentiment was the strongest seen for five years.

At 40.3 in February, the headline seasonally adjusted PMI - a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy - fell from 51.1 at the start of the year to signal a renewed decline in the health of the sector. Furthermore, it was the lowest PMI reading since the survey began in April 2004.

Production fell sharply during February as many firms shutdown or were operating below capacity due to restrictions put in place in response to the coronavirus outbreak. The rate of contraction was the quickest on record, and ended a six-month period of rising output. The total amount of new work received by Chinese manufacturers also declined at the steepest rate since the survey began in early 2004.