Chinese Service Sector Growth At 6-Month Low

China’s service sector grew at the slowest pace in six months in February due to a renewed fall in overall new business amid ongoing pandemic and measures to control the virus, survey results from IHS Markit showed on Thursday.

The Caixin services Purchasing Managers’ Index fell to 50.2 in February from 51.4 in January.

The score signaled only a marginal growth in services activity. Notably, the expansion was the softest seen since the current period of growth began last September.

Client demand dropped for the first time in six months due to the measures taken to contain the pandemic. Capacity pressures moderated in February, as highlighted by a softer increase in outstanding workloads.

Service sector employment fell for the second month running in February. However, the rate of job shedding eased since January.

On the price front, the input price inflation rose at the softest pace since August 2021. Likewise, prices charged for services also logged a slower growth.

Although firms saw a further slowdown in growth momentum during February, optimism around the 12-month outlook for output improved to a three-month high.

The composite output index that measures the performances of manufacturing and services, came in at 50.1 in February, unchanged from January and signaled only a fractional growth in overall business activity.

Epidemic control measures were strengthened, which restricted transportation and sales, Wang Zhe, a senior economist at Caixin Insight Group said.

Under the “triple pressure” of demand contraction, supply shocks and weakening expectations, the economy’s recovery is still not robust. Stabilizing economic growth remains an important focus of the government, Zhe added.

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