BEIJING (Reuters – China’s factory output fell in March, as it was subject to new downward pressures due to stringent COVID-19 control measures. A survey by the government showed this on Thursday.

According to the National Bureau of Statistics, PMI (official manufacturing purchasing managers’ index) dropped from 50.2 in February to 49.5 in March.

A Reuters poll predicted that the PMI would fall to 49.9. That’s a bit below the 50 point mark which separates growth from contraction.

In the first 2 months of 2022, the second-largest global economy saw a significant increase in activity. Key indicators are showing a rise that is well above expectations.

It’s now in danger of being hampered by authorities’ restrictions on production and mobility, as well as the policy to eliminate COVID, that places restrictions on financial centres Shanghai and Shenzhen.

Shanghai’s COVID-19 lockdown ravaged auto production recently as Tesla (NASDAQ:), two of its major suppliers, joined Tesla in closing plants to meet the measures taken to prevent the spread coronavirus.

Chinese Premier Li Keqiang announced earlier in this month that he would slow down economic growth to around 5.5% for this year. This was despite the decline of the property market and weak consumer demand.

Authorities have announced steps to help businesses, such as rent exclusions for small service sector companies, in order to cushion the effects of COVID-19 lockdowns.

Analysts say that the central bank will likely cut rates and reduce reserve requirements as downward pressures increase.

March saw a slowdown in growth of the services sector, with the official PMI non-manufacturing in March falling to 48.4 in comparison to 51.6 in February. The decline was due in part, in large, to viruses containment measures that have impacted consumer confidence.

China’s official composite PMI, which combines manufacturing and services, was at 48.8 for March, as opposed to 51.2 in Feb.