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FILE PHOTO: Customers eat lunch at a Hope Tree restaurant in Beijing
BEIJING, April 6 (Archyde.com) – China’s services sector activity contracted in March at the fastest pace in two years as rising coronavirus cases restricted mobility and weighed on demand, the report showed. Wednesday a survey of the private sector.
The Caixin Services Purchasing Managers’ Index (PMI) fell to 42.0 in March from 50.2 in February, falling below the 50-point mark that separates growth from contraction on a monthly basis. The reading indicates the largest decline in activity since the start of the COVID-19 pandemic in February 2020.
The survey, which focuses more on small businesses in coastal regions, coincided with an official survey, which also showed deterioration in the services sector.
Analysts say contact-intensive service sectors such as transport, hotels and restaurants were hit the hardest, clouding prospects for a much-anticipated pick-up in consumption this year.
The new business sub-index fell for the second month in a row, and at the fastest pace since March 2020.
With the Chinese economy facing serious problems, the big question is how long the country’s “zero tolerance” policy on COVID can be sustained, Zhiwei Zhang, chief economist at Pinpoint Asset Management said in a note.
“Economic activities have been sacrificed for more effective policies once morest omicron outbreaks. I anticipate that the outbreaks will be brought under control, with significant economic costs,” Zhang said.
The Caixin PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in China.
(Reporting by Ellen Zhang, Stella Qiu, and Ryan Woo; editing by Sam Holmes and Kim Coghill; translation by Flora Gómez)
