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China Caixin services PMI falls to 6-month low amid stifling COVID restrictions

A private gauge of China’s services sector slipped further into contraction in November, the lowest reading since May, reflecting continued downward pressures brought by the government’s efforts to stamp out COVID-19 outbreaks.

The Caixin China services purchasing managers index dropped to 46.7 in November, down from 48.4 in October, Caixin Media Co. and S&P Global said Monday. A reading below 50 suggests a contraction in activity.

The gauges for services activity and total new orders logged the worst performance in six months, said Wang Zhe, senior economist at Caixin Insight Group, adding that the contraction on the supply and demand side accelerated due to rising COVID infections and strict containment efforts.

The subindex for new export orders rose into expansionary territory, as overseas demand picked up following easing international travel restrictions, but the expansion was marginal amid a sluggish global economy, Wang said.

Employment in the services sector dived, with the subindex falling below 50 for the 10th time in the past 11 months, the lowest level since November 2005, as COVID outbreaks made it hard for some workers to return to factories and businesses cut jobs amid dented demand.

“The market remained cautiously optimistic,” Wang said. “Entrepreneurs’ concerns stemmed from the direction in which the pandemic was heading, and its impact on the market.”

Monday’s Caixin services PMI pointed in the same direction as a competing official nonmanufacturing PMI, which includes both services and construction activity. The official gauge fell to 46.7 in November, down from 48.7 in October, weighed by the hammered services sector and slower growth in construction activity, China’s statistics bureau said.

Read More: China Caixin services PMI falls to 6-month low amid stifling COVID restrictions

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