Services activity in China falls at the second steepest pace in history -Caixin PMI By Reuters

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Services activity in China falls at the second steepest pace in history -Caixin PMI By Reuters


©Reuters. FILE PHOTO: People inside a restaurant in Beijing, China, April 8, 2022. REUTERS/Tingshu Wang

BEIJING (Reuters) – Service sector activity in China shrank in April at the second-lowest rate on record as tightening COVID-19 controls slowed the industry, causing it to shrink more sharply. of new business and job creation, a private sector survey showed on Thursday.

Caixin’s services Purchasing Managers’ Index (PMI) fell to 36.2 in April, the second-lowest level since the survey began in November 2005, and down from 42 in March. The index reached 26.5 in February 2020, during the start of the pandemic, which represented the largest contraction in activity on record.

The 50-point mark separates monthly growth from contraction.

The pessimistic results of the survey, which focuses more on small businesses in coastal regions, are in line with the official government PMI and point to the rapid deterioration of a sector that represents around 60% of the economy and half of urban jobs.

The new business sub-index stood at 38.4, also the second-lowest on record and down from 45.9 the previous month, as service companies reported that stepped-up measures to contain the spread of coronavirus cases COVID-19 weighed heavily on customer demand early in the second quarter.

The China Lockdown Index, compiled by Goldman Sachs (NYSE:), rose by more than 14 points on average in April from March, as Shanghai’s business perimeter entered a citywide lockdown, with 25 million of residents locked in their homes.

The private sector survey also showed that employment fell for the fourth month in a row in April, although the decline was marginal, compared to significant declines in activity.

Input costs rose at a solid pace, but efforts by service companies to attract more business amid weak demand drove prices charged down, highlighting shrinking profit margins across the board. those faced by service providers.

“Demand was under pressure, external demand deteriorated, supply was reduced, supply chains were interrupted, delivery times were extended, work delays grew, workers had difficulty returning to their jobs , inflationary pressures persisted and market sentiment remained below the long-term average,” said Wang Zhe, senior economist at Caixin Insight Group.

As of Tuesday, 43 cities were under full or partial lockdowns or had implemented district controls, which entail strict mobility restrictions for local residents, according to Nomura.

The Politburo, the highest decision-making body of the Communist Party in power, has declared that China will intensify its support policy, but analysts say that its tasks and objectives will be more difficult unless China softens its “zero contagion” policy, somewhat which has shown few signs of doing.

Caixin’s April Composite PMI, which includes both manufacturing and services activity, fell to 37.2 from 43.9 in the previous month.

The Caixin PMI is compiled by S&P Global based on responses to questionnaires sent to China purchasing managers.

(Reporting by Stella Qiu and Ryan Woo; Editing in Spanish by Benjamín Mejías Valencia)

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