By Doris Yu
Investing.com – A private survey showed on Monday China’s services sectors grew at a slower pace in June, a 14-month low, due to a new wave of COVID-19 cases in Guangdong province. It indicated that the economic recovery of the world’s second-largest economy may start to slow down.
Data released earlier in the day said that the Caixin services purchasing managers index (PMI) in June was at 50.3, the lowest since April 2020. It was lower than May’s 55.1 figure but remained above the 50-mark, indicating growth.
Meanwhile, Caixin manufacturing PMI in June, released on Thursday, was at 51.3 figure, below the 51.8 figure in forecasts prepared by Investing.com and May’s 52 reading.
The slowdown in both manufacturing and services sectors indicated that demand may have peaked and China’s economic recovery from COVID-19 is starting to moderate, analysts told Reuters.
Although China’s services sector rebounded slower than the manufacturing sector, it had been boosted by a gradual improvement in consumption in the previous months.
However, an outbreak of COVID-19 in Guangdong province since late May and the following curbs on the spread of COVID-19 hurt consumer and business activity.
Though the government took immediate measures to curb the spread of COVID-19, the Caixin survey indicated that services providers' business outlook for the year ahead decreased to the lowest in nine months.
"The manufacturing industry has returned to normal in the wake of the epidemic, while the services industry is still sensitive to regional resurgences," Wang Zhe, Senior Economist at Caixin Insight Group, told Reuters. "In addition, the low base effect from last year will continue to weaken in the second half of this year. Inflationary pressure, intertwined with the economic slowdown, will still be a serious challenge."