China's factory output slumped to its lowest in two years in March, independent data showed Friday, as the country battles its worst Covid-19 outbreak since the start of the pandemic.

Authorities are struggling to stamp out coronavirus outbreaks with restrictions and lockdowns on key manufacturing and transport hubs like Shenzhen and Shanghai.

The purchasing managers' index (PMI) released by Chinese media group Caixin came just a day after official PMI figures said activity had contracted at the quickest rate since October 2021.

PMIs are a key gauge of activity in the country's factories. The Caixin survey, which covers small and medium-sized enterprises, is seen by some as a more accurate reflection of China's economic situation than the official government figures, which more closely track the condition of large state groups.

The Caixin PMI fell to 48.1 in March -- well below the 50-point mark that separates growth from contraction.

Both domestic and export orders fell at the fastest rate since February 2020, when China was battling its first coronavirus outbreak, the survey found.

"In March, Covid-19 flared up in several regions across China, disrupting manufacturing supply chains and impacting production," Wang Zhe, a senior economist at Caixin Insight Group, said in a statement.

"Market demand weakened, especially for consumer goods."

The Ukraine war has also led to a severe fall in demand for exports and blocked global transport links, he said.

Input costs rose to a five-month high as global supply chains were disrupted.

On Wednesday, facing the prospect of the world's second-largest economy slowing sharply, China's central economic planner held a meeting where it pledged to roll out stabilising policies.

China's factory activity shrinks as Covid hits economy
Beijing (AFP) March 31, 2022 - China's factory activity shrank in March, official data showed Thursday, as the country's worst Covid outbreak in two years brought sporadic lockdowns and factory closures.

The Purchasing Managers' Index (PMI) -- a key gauge of manufacturing activity -- slid to 49.5, just below the 50-point mark separating growth from contraction, according to data from the National Bureau of Statistics.

It was the first contraction in five months and was lower than expectations from economists polled by Bloomberg.

The fall comes as authorities struggle to stamp out coronavirus outbreaks with restrictions and lockdowns on key manufacturing hubs such as Shenzhen in the south and Changchun in the northeast.

"Recently, clustered outbreaks have occurred in many places in China," NBS senior statistician Zhao Qinghe said in a statement Thursday.

"Coupled with a significant increase in international geopolitical instability, the production and operation activities of Chinese enterprises have been affected," he added.

For weeks China has recorded thousands of virus cases each day, after nearly two years of extinguishing almost all infections within its borders.

That has rattled its "zero-Covid" strategy.

Some companies have temporarily reduced or stopped production because of Covid.

The non-manufacturing PMI also plunged, to 48.4 from 51.6, with the service industry significantly hit by the outbreak.

Nomura chief China economist Lu Ting expected the PMIs to drop further "on escalated lockdowns and social distancing measures".

He warned the lockdown in Shanghai was causing shipping delays and port congestion, with data suggesting more than 150 cargo ships are queuing outside ports in eastern China.

"Beijing's determination in maintaining its zero-Covid strategy for fighting the infectious Omicron variant will very likely deal a severe blow to the Chinese economy," he told AFP.

Covid-19 restrictions have taken a heavy toll on the Chinese travel industry, with the three biggest airlines reporting a total annual loss of 40.9 billion yuan ($6.5 billion) last year.

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China's factory activity shrinks as Covid hits economy
Beijing (AFP) March 31, 2022
China's factory activity shrank in March, official data showed Thursday, as the country's worst Covid outbreak in two years brought sporadic lockdowns and factory closures. The Purchasing Managers' Index (PMI) - a key gauge of manufacturing activity - slid to 49.5, just below the 50-point mark separating growth from contraction, according to data from the National Bureau of Statistics. That marked the first contraction in five months and was lower than expectations from economists polled by Bl ... read more