(Bloomberg) -- China’s manufacturing activity dropped further in February as the Lunar New Year holidays disrupted production, while travel restrictions to contain virus outbreaks cut spending on services.

  • The official manufacturing purchasing managers’ index fell to a nine-month low of 50.6 from 51.3 in January, the National Bureau of Statistics said Sunday, lower than the median estimate of 51 in a Bloomberg survey of economists
  • The non-manufacturing gauge, which reflects activity in the construction and services sectors, declined to 51.4, versus a median estimate of 52. Readings above 50 indicate expansion in output

Key Insights

  • Manufacturing activity is usually distorted by the week-long Lunar New Year holidays, which fell in February this year, with factories and businesses closing as many people travel back to their hometowns for family gatherings. This year, however, travel was restricted to contain virus outbreaks, prompting workers to stay near their job locations and some factories to resume production early
  • The services sector was also affected by the holidays, although the picture was more mixed. While travel plunged, spending at larger retailers and restaurants in major cities climbed from a year ago when the economy was in lockdown. Cinema box office sales also soared
  • A set of early economic indicators tracked by Bloomberg showed the recovery continued to gather pace in February

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  • A sub-index of new export orders for factories slumped to 48.4 in February from 50.2 in the previous month, while the new orders index fell to 51.5
  • A sub-index of manufacturing employment eased to 48.1
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