(Yicai Global) Jan. 3 -- China’s manufacturing activity remained in contraction territory for a fifth month in a row in December because of the disruption caused by Covid-19, a widely watched private survey showed.

The Caixin/Markit manufacturing purchasing managers’ index fell to 49 last month, the lowest in three months, from 49.4 in November, according to figures released by financial media group Caixin today. A level below 50 indicates contraction.

The official manufacturing PMI, published by the National Bureau of Statistics on Dec. 31, fell to 47, the lowest since March 2020, from 48 the previous month.

The spread of Covid-19 in China last month continued to depress economic activity, said Wang Zhe, senior economist at Caixin Insight Group.

“Supply contracted, total demand remained weak, overseas demand shrank, employment deteriorated, logistics was sluggish, manufacturers faced growing pressure on their profitability, and the quantity of purchases as well as inventories stayed low,” Wang said.

But with the easing of Covid-19 controls, manufacturing companies have become more optimistic, he added. Expectations for this year rose among firms polled by Caixin/Markit last month, with optimism climbing to a 10-month high, as they generally anticipate an increase in production as the epidemic wanes and market conditions improve.

December’s production sub-index fell to the lowest in four months, with some firms reporting a relative improvement in production and operating conditions. The new orders sub-index fell by the most in three months, while overseas demand for Chinese products fell at a faster pace than in November.

The drop in the employment sub-index was second only to the 33-month record set in November.

Editor: Futura Costaglione