By Gina Lee
Investing.com – China’s services sector expanded at the slowest pace in six months, a private survey showed on Thursday. The industry continues to struggle under tough containment measures to stop the spread of COVID-19 outbreaks.
The Caixin services purchasing managers index (PMI) was 50.2 in February 2022, lower than the 50.9 predicted in Investing.com forecasts and January’s 51.4 figure. The 50-mark indicates growth.
The data follows that released on Tuesday, which showed that the non-manufacturing PMI for the services sector was 51.6. The manufacturing PMI was 50.2 and the Caixin manufacturing PMI was 50.4.
Continuous outbreaks of COVID-19 in the country have left the services sector vulnerable, with numbers surging past a record 50,000 in the Special Administrative Region of Hong Kong. Measures implemented to contain the cases have damped demand in sectors such as travel.
New export business fell a second consecutive month, albeit at a slower pace. This meant another reduction of payrolls at China's services firms, but the fall was smaller.
"Demand for services contracted, while supply expanded at a limited pace. The spread of COVID-19 in several regions hurt business operations of service companies," Caixin Insight Group senior economist Wang Zhe told Reuters.
"Policymakers should enhance support policies to encourage employment, strengthen structural support for small and mid-size enterprises and effectively reduce the tax burden and fundraising costs for companies," he added.
The focus is now squarely on the 13th National People’s Congress, whose fifth annual session, which begins on Mar. 5. The government will disclose the economic targets for 2022, and expectations for more stimulus measures are also growing.
The Caixin services survey also showed that inflationary pressures are starting to ease. It also showed that confidence for the year was at a three-month high as companies look towards a strong economic recovery from COVID-19.