According to a Reuters poll, manufacturing activity in China will shrink at a slower pace in January than in December, with workers continuing to fall ill with coronavirus after the government lifted a regime of strict restrictions.

The resurgence of infections among the population has gone even faster than economists expected, hence the continued disruptions to companies’ production lines.

According to the average forecast of 25 economists, China’s official business activity index (PMI) for the manufacturing sector rose to 49.8 in January from 47.0 in December.

A value above 50 indicates a month-on-month increase in activity, while a value below indicates a contraction. The official manufacturing PMI, which mainly focuses on large and state-owned companies, as well as a survey of the service sector, will be released on Tuesday.

The National Bureau of Statistics highlighted the fact that after the removal of the “zero tolerance” policy for the virus and the week-long celebration of the Lunar New Year that ended on Friday, COVID-19 infection among the labor force and seasonal factory closures are significantly affecting labor productivity this month.

China’s chief epidemiologist pointed out that 80% in people in China were infected with COVID-19 before the festivities began, with the wave of infections traveling through the country faster than economists expected and causing fewer disruptions.

However, China faces headwinds from demand as Chinese export-oriented manufacturers are still seeing shrinking order books amid concerns about a global recession.

During the Lunar New Year holiday, consumption rose 12.2% year-on-year.