CAIXIN/MARKIT Service Purchase Manager Index fell to 50.3 in June
Growth in China’s services sector slowed to its lowest point in 14 months last month as coronavirus incidents spiked in the country’s southern regions.
This appears to indicate that the world’s second largest economy is hesitating on the road to recovery, according to the Caixin China General Services PMI Survey.
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The Caixin/Markit Services Purchasing Managers’Index (PMI) fell to 50.3 in June, down from 55.1 in May to its lowest level since April 2020.
However, it remained above 50 levels. Below that marker represents contraction.
In addition to dropping out of the manufacturing sector, analysts said the level of demand in China, which was built through the pandemic, may have peaked. This has eased the country’s recovery rate.
The outbreak of Covid-19 delta variants in Guangdong, the region where both goods are exported and manufactured, has slowed consumers and business activities.
In a more positive note for China, the report showed ease of inflation. This has impacted the company’s profit level in recent months. “While inflation in compound input costs softened to an eight-month low, the prices charged by Chinese companies have increased slightly,” the report states.
Dr. Wang Zhe, senior economist at Caixin Insight Group, commented on China’s General Services PMI™ data.
“The Caixin China General Services Business Activity Index was 50.3 in June, down from 55.1 in the previous month. June measurements were the lowest since April 2020. The Services division was the 14th consecutive month in June. It has expanded, but the expansion rate has dropped significantly from the previous month.”
“Both supply and demand in the services sector have expanded. Business activity gauges and total new orders remained in the active territory for the 14th consecutive month of June, but both are lowest in 14 months The recent revival of Covid-19 in the Pearl River Delta had a specific impact on the services sector. External demand improved slightly. The expansion rate was small, but the new export business was The gauge has risen to positive territory.”
“Employment in the services sector has been under pressure. The revival of Covid-19, coupled with lower supply and demand, will hurt the labor market. Employment measures have entered the contraction area for the first time in four months in June. It fell, but the contraction was not significant, and the weak market also reduced the unpaid workload of service companies.”
