BEIJING, Dec 31 Reuters China39;s factory activity shrank for the third straight month in December and at the sharpest pace in nearly three years as COVID infections swept through production lines across the country after Beijing39;s abrupt reversal of antivirus measures.

The official purchasing managers39; index PMI fell to 47.0 from 48.0 in November, the National Bureau of Statistics NBS said on Saturday. Economists in a Reuters poll had expected the PMI to come in at 48.0. The 50point mark separates contraction from growth on a monthly basis.

The drop was the biggest since the early days of the pandemic in February 2020.

The data offered the first official snapshot of the manufacturing sector after China removed the world39;s strictest COVID restrictions in early December. Cumulative infections likely reached 18.6 million in December, UKbased health data firm Airfinity estimated.

Analysts said surging infections could cause temporary labour shortages and increased supply chain disruptions. Reuters reported on Wednesday that Tesla plans to run a reduced production schedule at its Shanghai plant in January, extending the reduced output it began this month into next year.

Weakening external demand on the back of growing global recession fears amid rising interest rates, inflation and the war in Ukraine may further slow China39;s exports, hurting its massive manufacturing sector and hampering an economic recovery.

Most factories I know are way below where they could…