China factory index at 19-month low as holiday slows work

In this Feb. 22, 2018 photo, a woman works with spools of thread in a textile company in Hai'an county in eastern China's Jiangsu province. A report released Wednesday, Feb. 28, 2018 says that China's manufacturing activity weakened to its lowest level in 19 months as the extended Lunar New Year holiday has left the month with fewer work days. (Chinatopix via AP)

HONG KONG — China's manufacturing activity weakened to its lowest level in more than a year and a half as the extended Lunar New Year holiday curtailed production.

The official purchasing managers' index released Wednesday slipped to 50.3 in February from 51.3 in the previous month, its biggest drop in nearly six years.

The last time the index was lower was in July 2016. It has now fallen for the third straight month though it remains just above the 50-point mark signifying expansion on the index's 100-point scale.

Output and new orders grew at a slower pace for the month while new export orders weakened further, contracting for the second straight month, according the report's sub-indexes.

The China Federation of Logistics & Purchasing's PMI is a widely watched early indicator of health in the vital manufacturing sector, which employs many millions of workers and is a key component of China's economy, the world's second biggest.

The Lunar New Year tends to distort readings because the holiday falls at different times in the first two months of the year. Factories usually stock up on raw materials and scramble to fill orders before shutting for a weeklong break, which this year began in mid-February.

"The time around the festival is traditionally a slow business season. Enterprises generally stop work to reduce production and market activity weakens," said senior statistician Zhao Qinghe of the National Bureau of Statistics, which released the data on its website.

But because the drop was so big, economists suspected other factors were also involved. Beijing's intensive anti-pollution campaign likely "played an important role in dampening the headline numbers on top of the holiday effect," ANZ Bank's China Economist Betty Wang said.

A separate report showed activity also cooled in China's services sector for the first time in four months. The non-manufacturing purchasing managers' index slipped to 54.4 in February from 55.3 in January.

People also read these

In drought, drones help California farmers save every drop

Aug 29, 2016

In the drought-stricken West, where every drop of water counts, some California farmers are using advanced drone technology to save the scarce resource

Global stocks lower, except for Tokyo, on Yellen speech

Aug 29, 2016

Most global stocks slipped Monday on remarks from the U.S. Federal Reserve late last week that the case has strengthened for raising interest rates, but the Tokyo market was an exception and gained on prospects for a strong dollar

Police look into whether sun glare was factor in kayak crash

Aug 31, 2016

Authorities are looking into whether sun glare was a factor in an accident in which a ferry departing a New York City pier slammed into a group of kayakers, critically injuring one

Walk The Biz welcomes all casual and easygoing readers who seeks to digest business travel to international trade policy to starting in the transportation & shipping industry.

Subscribe to our newsletter now!