Photo: Xinhua

China's Caixin manufacturing purchasing managers' index (PMI), a gauge of small and medium-sized manufacturers' activity, hit a record low of 40.3 in February amid the COVID-19 outbreak, but industry insiders and economists are optimistic about a rebound in March as workers are going back and firms are restarting production.

The index, falling into the contraction range, slipped 10.8 points from January. The expected figure for February was 46. The February reading was even lower than 40.9, the Caixin manufacturing PMI recorded in November 2008, when the global financial crisis broke out. 

The new orders index plummeted to an unprecedented low in February, according to the survey. New export orders also dropped "drastically" in the same month due to logistics hurdles and order cancellations from foreign clients.

The slumping figures are the result of a near standstill among small and medium-sized enterprises (SMEs) in February, as Chinese firms postponed business reopening due to coronavirus concerns, industry insiders said. 

While such delays eroded their profitability, some SMEs told the Global Times that they are more concerned about keeping their foreign clients on hold. Some worried that clients may turn to manufacturers in other countries if shipments are not delivered on time. 

The results of the private survey also underscore the many challenges faced by SMEs, from labor shortage issues and supply chain disruptions to reduced stockpiles of raw materials. 

"About 50 percent of our employees have returned and only one-third of our production capacity has been restored, because some upstream manufacturers have not resumed production, and logistics have not yet been fully restored," Duan Lianmin, chairman of a glass factory in Shenzhen, South China's Guangdong Province, told the Global Times on Monday.

Having just scrambled to resume production over the last week, Duan said the company is now in a hurry to send the goods to customers in Malaysia, and pick up other foreign orders as soon as possible.

The results are in line with China's official manufacturing PMI, which came in at 35.7 in February, also the lowest in history. 

But economists forecast that as the epidemic shows signs of abating in China and as economic activities gradually return to normal, the PMI will bounce back significantly in March and through the rest of the year.

Industry players are also expecting a rebound to come soon, as operations are gradually getting back to normal with traffic blocks being removed and government support measures on the way. The survey also revealed that Chinese manufacturers' optimism about production over the next 12 months has jumped to a five-year high.

"Apart from two workers, who are still unable to come back due to the coronavirus impact, all of our staff have back to their position," Jack Wang, an owner of an auto parts factory in Nantong, East China's Jiangsu Province, told the Global Times on Monday, saying that its factory has managed to restore about 80 percent of production ability so far.

Wang said that some of the upstream factories have not yet resumed production, thus orders are not coming as many as expected for now, but noted that he is "quite confident" that a recovery would come in March. 

Duan from the glass firm also expected the firm could restore normal production ability by the end of March.

About 97 percent of top 500 Chinese manufacturers have thus far resumed production, according to a report issued by the China Enterprise Confederation over the weekend.