(Yicai Global) March 31 -- China’s manufacturing activity contracted this month mainly because of a resurgence of Covid-19 in the country coupled with global geopolitical uncertainty.

The purchasing managers’ index for manufacturing stood at 49.5 this month, down from 50.2 in February, the lowest since November last year, according to data the National Bureau of Statistics released today. A reading below 50 indicates a contraction.

The reappearance of Covid-19 in China and uncertainties overseas such as the Russia-Ukraine conflict were mainly to blame for the decline, said Zheng Huocheng, head of a research institute under Yingda Securities.

As a result, China is likely to put more effort into implementing prudent monetary policies to provide more support to the real economy, he said.

Some companies temporarily cut or halted production due to recent Covid-19 outbreaks, with export orders at some firms canceled, said Zhao Qinghe, a senior NBS statistician. Manufacturing activity and demand also have weakened because of the recent international geopolitical conflict.

The production and new orders sub-indexes fell 0.9 percentage point and 1.9 point to 49.5 and 48.8, respectively. The suppliers’ delivery time index plunged 1.7 point to 46.5, a two-year low, as the Covid-19 outbreaks have affected the stability of the manufacturing supply chain.

On the other hand, the purchase price index soared 6.1 points to 66.1, the highest in the past five months. The ex-factory price index, which rose 2.6 points to 56.7 was also at the highest since last October.

China’s economic prosperity level has declined, but most companies are still confident, Zhao said, pointing out the indexes for manufacturing production and business activities expectations and non-manufacturing business activities expectations stayed in positive territory at 55.7 and 54.6, respectively.

The country’s economic foundations are still stable, said Wen Tao, an analyst at the China Logistics Information Center, adding that market players should be confident as the economy will stabilize as the epidemic eases.

Editor: Futura Costaglione