China Services-Sector Growth Drops to 10-Month Low
A private gauge of China’s services-sector activity fell in February, with the rate of growth in business activity dropping to a 10-month low, as a recent resurgence of Covid-19 cases globally dampened overseas demand.
The Caixin China services purchasing managers index fell to 51.5 in February from 52 in January, Caixin Media Co. and research firm Markit said Wednesday. But the index still stood above the 50-mark separating expansion from contraction for the 10th straight month, signaling that supply and demand in the services sector continue to grow.
Total new orders received by Chinese services companies expanded at a softer rate in February as business activity rose modestly. The subindex of exports fell into contractionary territory for the first time in four months, Caixin said.
The subindex of employment also returned to negative territory for the first time since last July, as services providers cut staff to reduce costs as weakened market sentiment had a knock-on effect on the job market, said Wang Zhe, senior economist at Caixin Insight Group.
Meanwhile, “inflationary pressure increased as input costs still rose quickly,” Mr. Wang said. Services providers are generally optimistic about the economic recovery, and confident that the pandemic will fade both domestically and overseas, he added.
China’s official nonmanufacturing purchasing managers index, a competing gauge, came in at 51.4 in February, down from 52.4 in January, according to the National Bureau of Statistics on Sunday.
The Caixin PMI is tilted more toward smaller companies, which tend to be more volatile, especially during the Lunar New Year. The official gauge is weighted toward larger companies.
Source: Dow Jones