China reports expansion in manufacturing and services sectors in January amidst the Coronavirus emergency

The National Bureau of Statistics revealed its January’s report on the official manufacturing Purchasing Managers’ Index (PMI) for China. According to the report, manufacturing PMI matched the analysts’ forecast of 50.0 in January. In the previous month, the figure was recorded at a marginally higher 50.2.

As a standard, PMI readings below 50 are construed as contraction. At 50.0 in January, China’s factory activity remained out of the contraction territory. China’s manufacturing PMI for January came out right after the WHO (World Health Organization) declared the recent Wuhan-started Coronavirus outbreak as a global health emergency on Thursday.

January’s Report Doesn’t Fully Reflect The Impact Of The Virus Outbreak

The Statistics Bureau commented on January’s report and highlighted that the impact of the outbreak is not yet fully reflected in the PMI reading as data collection was completed before January 20^th. Officially, the first case of Coronavirus was reported in Wuhan at the end of December. Analyst Martin Lynge Rasmussen of Capital Economics suggested that the PMI readings in the upcoming months will offer a better insight into how threatening the outbreak has turned for the largest Asian economy.

As for an estimate, Nomura economists forecast a massive drop to 45 or even 40 for the PMI figures in the upcoming months attributed to the Coronavirus outbreak. As of Thursday, 9,692 confirmed cases of the virus have been reported in China while the National Health Commission reports 213 casualties so far.

China’s economy struggled in 2019 due to the trade conflict with the United States. With this virus outbreak at the start of the new year, the outlook for 2020 isn’t looking very upbeat either, as per the experts.

China’s Services PMI For January Beats Analysts’ Estimate And December’s Reading

In an attempt to contain the virus, China has recently declared that its Lunar New Year holidays will be extended. From an economic point of view, global supply chains and businesses at large are likely to take a massive blow due to the extension. The impact of the Coronavirus outbreak isn’t confined to China as the global financial markets are keeping wary of how it could impact the global economic affairs in general.

January’s PMI for the services sector in China, however, came out better than the expected 53.1. The 54.1 reading for January was above December’s 53.5 as well. With markets remaining close in China due to the virus outbreak, an insight into how Friday’s economic data affected CNY in the forex market isn’t available.