Factory activity in China shrank slightly in January even before the country's biggest national holiday, Spring Festival, and the breakout of the novel coronavirus.

The purchasing managers' index (PMI) for China's manufacturing sector stood at 50 in January, down from 50.2 in December, the National Bureau of Statistics said (link in Chinese) on Friday. A reading above 50 indicates expansion, while a reading below demonstrates contraction.

On a month-on-month basis, the sub-index for production lowered 1.9 points to 53.2 in December, indicating slower expansion.

"The production slowed significantly," said two analysts in an article published on one of Everbright Securities's official WeChat accounts.

The Finished Goods Inventory Index has risen for the first time in five months, the analysts added, and Chinese "companies' reactive destocking process was near the end."

The PMI for China's non-manufacturing sector came in at 54.1 in January, up from 53.5 in December.

China's overall composite PMI was down 0.4 points to 53.0, showing the overall expansion of production and operation activities has slowed down.

Due to the Spring Festival holiday, the surveys were conducted earlier in January.

"Since the survey was conducted before January 20, the impact of the novel coronavirus infection has not been fully manifested in the survey," said a statement from the bureau.

Recalling the memory of SARS in 2003, some people are worried about a potential economic plunge caused by the the spreading virus.

"We believe that the coronavirus will bring the biggest economic impact to the first quarter of 2020," said the analysts, "and the economy will basically return to normal in the second quarter, especially in the second half of the year."

"The epidemic will not change the long-term development trend of China's economy."