Chinese manufacturing hits record low as coronavirus shuts factories

On February 18, Apple warned investors that it won't meet its second-quarter financial guidance because the viral outbreak in China has cut production of iPhones. Photo / AP

Chinese factory activity nosedived last month, at a faster pace than during the financial crisis, underscoring the havoc wreaked by the coronavirus on the world's second-biggest economy.

China's purchasing managers' index fell to a record low of 35.7 in February from 50 in January - below the 46 reading expected by economists, a report by the National Bureau of Statistics (NBS) of China showed. A number above 50 indicates expansion and below 50 contraction.

The readings provide the first opportunity to take the temperature of the Chinese economy since the outbreak of Covid-19, which has killed almost 3,000 people in mainland China and infected about 80,000. The number of new cases has been falling in the past 10 days.

Despite President Xi Jinping's diktat last weekend that less exposed regions should "resume full production and normal life", officials are balancing the needs to contain the outbreak and reboot the paralysed economy.

Production at small and medium-sized companies was just 32.8pc of pre-suspension levels on Wednesday, official data showed.

Many migrant workers, especially in Hubei province - the outbreak's epicentre and a key industrial hub - are still off work because of quarantine rules and travel bans to stop people infecting each other on public transport. Even some firms that have resumed work are running below capacity.

Larry Hu of Macquarie Capital said the Chinese Government's willingness to report such devastating data revealed that "things are really bad".

Capital Economics expected the economic contraction to continue for the rest of the quarter - for the first time since the Cultural Revolution.

Analysts also warned that the spread of the virus to other countries would impact global supply chains, hindering the recovery for Chinese manufacturers.

The transportation, tourism and catering sectors also contracted sharply, according to a separate NBS survey.