China’s manufacturing and service sector activity contracted in March for the first time in nearly two years, underscoring economic pressure from the government’s strict coronavirus measures.

The official manufacturing purchasing managers’ index, a gauge of factory activity that separates monthly expansions from contractions, fell to a five-month low of 49.5 at 50. The non-manufacturing PMI fell to 48.4, the lowest level since August.

The PMI data came hours after state media reported that Chinese Premier Li Keqiang was gearing up for efforts to support economic growth.

While specific measures were not disclosed, the State Council noted that 40% of this year’s 3.65 billion yuan ($575 billion) special bond quota, mainly for infrastructure investment, has been dispersed. It also warned government agencies to refrain from taking “measures that are not conducive to stabilizing market expectations” and to prepare “contingency plans for possible encounters with greater uncertainty.”

The coronavirus outbreak across China is affecting businesses, said Zhao Qinghe, a senior statistician at the National Bureau of Statistics.He noted that some companies have complained understaffed It added that indicators for delivery times were at their lowest level since March 2020, shortly after the outbreak of the pandemic in central China.

The State Department pledge marks the second time in as many weeks that the Chinese government has attempted to boost confidence in the country’s economic outlook.

On March 16, a State Council committee headed by Liu He, President Xi Jinping’s closest economic adviser similar promise to reassure investors jittery about the coronavirus outbreak, and Economic impact Russia invaded Ukraine.

After Liu’s intervention, Treasury says it won’t go ahead with long-delayed plan Introduce property tax in various cities. China’s securities regulator also urged state-owned enterprises and financial institutions to help stabilize the country’s financial markets.

China is battling its worst Covid-19 outbreak in two years after it largely contained the virus since its initial outbreak through strict lockdowns, quarantines, travel restrictions and mass testing.

This week, China’s main financial center, Shanghai, was locked down for widespread testing divide cities half and isolate it from the rest of the country. Earlier, officials had said the lockdown would not be imposed.

East Shanghai closed for four days Pudong areaHome to about 9 million people, including its famous financial district, it is scheduled to close at 5am on Friday. About 16 million people living in the Puxi area in the west of the city will begin a four-day lockdown.

On Thursday, Shanghai officials said 5,653 cases had been confirmed on March 30, down slightly from 5,982 a day earlier.

Julian Evans-Pritchard, senior China economist at Capital Economics, said the PMI data “suggests that the economy is contracting at its fastest pace since the peak of the initial Covid-19 outbreak in February 2020”.

He added that the decline in non-manufacturing was “driven entirely by the sharp drop in the services index” as consumers became more cautious amid the new virus outbreak as strict movement restrictions and city-wide lockdowns were re-imposed.