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

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

The Purchasing Managers' Index (PMI), an early gauge of factory activity, came in at 50, down slightly from 50.2 the month before. A reading above 50 indicates the sector is expanding while below that number shows contraction.

The figure comes as China battles the spread of a coronavirus that has triggered an unprecedented shutdown of transport and business in Hubei province -- the centre of the outbreak.

However, the National Bureau of Statistics said the survey was conducted before January 20 so "the impact of pneumonia caused by the new coronavirus has not yet fully manifested".

The first patients were taken ill in early December but many of the restrictions only came into effect over the last week.

Non-manufacturing activity stood at 54.1, an improvement from 53.5 in December.

Higher demand ahead of the Lunar New Year holiday was said to have contributed to December's expansion after a tough year for China amid its bruising trade war with the United States.

United Overseas Bank economist Ho Woei Chen told AFP that Friday's numbers do not reflect the full impact of the virus.

"The first-order impact is on tourism and transportation," she said. "This will have a direct and immediate impact on private consumption and industrial activities in China, with many companies extending their closures and residents being quarantined."