China's factory activity falls in January as virus fears grow

China's manufacturing activity slipped in January, official data showed Friday, as the country grapples with a new virus that has claimed more than 200 lives.

Official figures released Friday showed that the Purchasing Managers' Index (PMI) for manufacturing, an early gauge of factory activity, came in at 50.0, down slightly from 50.2 in the month before.

A reading above 50 indicates the sector is expanding while below 50 shows a contraction. 

The findings come as China battles the spread of a new virus that has caused an unprecedented shutdown of transport and manufacturing in China, and locked down much of Hubei province -- the epicenter of the outbreak.

But the National Bureau of Statistics warned that because the survey was conducted before January 20, "the impact of pneumonia caused by the new coronavirus has not yet (been) fully manifested".

"Future trends will need further observation," it said in a statement.

The first cases of the outbreak appeared in early December, but many of the restrictions came into effect over the last week, after the data were gathered.

The non-manufacturing activity index stood at 54.1, an improvement from 53.5 in December.

Demand ahead of the Chinese New Year holiday was said to have contributed to December's expansion after a tough year for China as it underwent a bruising trade war with the United States.

But despite a partial trade deal signed in mid-January, the latest numbers come as China took a hit in recent weeks from the spread of the new virus.

Chinese holidaymakers have been staying home in a highly unusual Lunar New Year this year as local authorities closed public attractions, cancelled major events and urged people to avoid large gatherings.

Cinemas around China have closed as well during what is generally a prime time for blockbuster releases.

Other countries have told their citizens to avoid travel to China, with several airlines trimming back their schedules.

Manufacturers, too, are not taking any chances, with Taiwanese tech giant Foxconn keeping its Chinese factories closed until mid-February.

Toyota, IKEA, Starbucks, Tesla, McDonald's and Volkswagen were among the corporate giants temporarily freezing production or closing large numbers of outlets in China.

The holidays may mean there is little immediate impact on auto-manufacturers' production, but there is growing concern surrounding the virus' longer-term effects on the economy.