ACTIVITY in Chinese manufacturing and services simultaneously contracted in March for the first time since the height of the country’s COVID-19 outbreak in 2020, adding to the urgency for more policy intervention to stabilize the economy.

The official manufacturing purchasing managers’ index (PMI) fell to 49.5 from 50.2 in February, breaching the 50-mark that separates expansion from contraction for the first time in five months, data from the National Bureau of Statistics (NBS) showed Thursday.

While the non-manufacturing PMI, which measures activity in the construction and services sectors, eased to 48.4 from 51.6 in February.

The last time both PMI indexes simultaneously were below the 50-point mark was in February 2020, when authorities were racing to arrest the spread of the coronavirus, first detected in the central Chinese city of Wuhan.

China’s economy revved up in the January-February period, with some key indicators blowing past expectations, but is now at risk of slowing sharply as authorities restrict production and mobility in COVID-hit cities, including Shanghai and Shenzhen. China is battling its worst outbreak since the initial flareup two years ago.

“Recently, clusters of epidemic outbreaks have occurred in many places in China, and coupled with a significant increase in global geopolitical instability, production and operation of Chinese enterprises have been affected,” said Zhao Qinghe, senior NBS statistician.

Weakening production and demand sped up the contraction in factory jobs, with the employment sub-index slipping to 48.6 in March, the lowest since February 2021.

To cushion the impact of new COVID-19 lockdowns, authorities have unveiled steps to support business, including rent exemptions for some small services-sector firms.

On Wednesday, the government said it will roll out policies to stabilize the economy as soon as possible. (SD-Agencies)