Factory and service activity in China unexpectedly expanded in March, after contracting sharply to a record low, but the rapid global spread of the coronavirus is expected to keep businesses and the overall economy under heavy pressure as foreign demand slumps.

The Purchasing Managers' Index (PMI) rose to 52 in March from the collapse to a record low of 35.7 in February, China’s National Bureau of Statistics said on Tuesday, and above the neutral 50-point mark that separates growth from contraction on a monthly basis.

Analysts polled by Reuters had expected the March headline reading to come in at 45.0.

Analysts are forecasting China to suffer a steep economic contraction in the first quarter due to widespread disruptions to business and consumer activity caused by the virus as authorities put in place tough public measures to contain the pandemic.

Services PMI up

The nations’ services activity also recorded expanded in March, but business is expected to take some time to return to normal as the economy struggles to recover from the coronavirus shock.

The official non-manufacturing Purchasing Managers’ Index (PMI) rose to 52.3, after plunging to 29.6 in February, the National Bureau of Statistics said on Tuesday. The 50-point mark separates growth from contraction on a monthly basis.

The coronavirus outbreak and strict measures to contain it saw many parts of the country locked down, severely disrupting the manufacturing and services sectors. Shops, restaurants and transport-related businesses saw a slump in sales due to quarantine measures and travel restrictions.

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