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Data: JPMorgan; Chart: Axios Visuals

The global manufacturing industry fell into contraction in February, largely as a result of the coronavirus outbreak, with activity in China shrinking at a record pace, dragging down the world's index.

The state of play: It was the steepest contraction since 2009, JPMorgan reported, "as demand, international trade and supply chains were severely disrupted by the COVID-19 outbreak."

  • "Output fell across the consumer, intermediate and investment goods industries, with the steepest drop at investment goods producers."

Between the lines: The numbers may even be too optimistic, says Nikhil Sanghani, assistant economist at Capital Economics. He notes "two key reasons" the readings, especially in emerging countries like China, Brazil and India that drive global growth and manufacturing, understate the toll of the outbreak's impact.

  • "First, the large drops in the suppliers’ delivery times component of the PMIs in most countries added to headline indices. This index is inverted as, in normal times, longer delivery times reflect strong demand causing bottlenecks. But now, it is a symptom of disruption to production."
  • "Second, the February survey period preceded the jump in cases outside of China. Most surveys were conducted around 12th to 20th February, yet there has been a surge in coronavirus cases since then. This is particularly so in Korea where measures taken to contain the virus, including a shutdown of Daegu (the country’s fourth largest city), will limit manufacturing activity."

Watch this space: "The upshot is that the manufacturing PMIs outside of China will probably weaken in March," Sanghani says.

Go deeper: The growing coronavirus recession threat

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