China’s services sector suffered its worst month on record in February as efforts to contain coronavirus tanked the world’s second-biggest economy, survey data showed overnight.
Separate data showed that Hong Kong’s entire private sector suffered its worst contraction on record in February, as China’s economic woes spread over the border.
The Chinese Caixin/Markit services purchasing managers’ index (PMI) plunged to 26.5 in February from 51.8 in January. A score of under 50 indicates contraction, and this was by far the biggest on record. The gauge of its private sector also hit a record low.
Hong Kong’s IHS Markit private sector PMI – which indicates the health of the private sector – plunged to 33.1 in February from 46.8 in January, also the biggest drop since records began.
Coronavirus has now killed nearly 3,000 people and infected more than 80,000 in China. Vast swathes of the country have been on lock-down, with offices lying dormant and consumers quarantined.
Hong Kong has reported two deaths and around 100 cases, but its economic fate is closely linked to the world’s second-largest economy.
The virus is the second blow to shake the city’s economy following months of political protests last year.
Zhengsheng Zhong, chairman and chief economist at CEBM Group, said of the Chinese data: “Stagnating consumption amid the coronavirus epidemic has had a great impact on the service sector.”
He said demand fell sharply, firms struggled to recruit workers, supply capacity dropped markedly, and business confidence hit a record low.
Bernard Aw, principal economist at IHS Markit, said of the Hong Kong survey: “The latest PMI flashed red warning lights on the dire private sector conditions across Hong Kong in February.”
He said new sales sank “at a record pace in an economy that has been beset earlier by political protests and US-China trade war tensions”.