China’s Jan factory activity seen to be stalling, virus adds to risks

This article is more than 12 months old

Jan 30, 2020 06:00 am

BEIJING

Growth in China's sprawling manufacturing sector likely stalled this month after two months of modest gains, with an outbreak of a new virus adding to risks facing the already struggling economy, a Reuters poll showed.

At least 132 people have died from the virus in China in the last few weeks and nearly 6,000 have been infected, prompting widespread transport curbs and tough public health measures that are weighing heavily on the travel, tourism and retail sectors.

The official Purchasing Managers' Index for this month is expected to fall to a neutral 50 from 50.2 last month. The 50-mark separates expansion from contraction on a monthly basis, according to the median forecasts of 29 economists. The data is expected to be released tomorrow.

China will also release a similar survey on activity in the non-manufacturing sector, which may give a better reading of the initial economic damage. Shops, restaurants and movie theatres are expected to see a slump in sales as people avoid crowded areas.

The timing of the long Chinese New Year holiday had already been expected to dampen factory activity to some extent.

Many businesses cut back operations or shut completely for a week or more to allow millions of workers to return home for celebrations. - REUTERS