BEIJING • China's services sector activity expanded at a slower pace last month, a private sector survey showed yesterday, as sporadic coronavirus outbreaks tempered the recovery in consumer confidence and weighed on new business growth.
The Caixin/Markit services Purchasing Managers' Index (PMI) eased last month to 56.3, a three-month low, from 57.8 in November, but remained well above the 50-mark that separates growth from contraction on a monthly basis, pointing to brisk expansion.
A sub-index for new business stood at 54.3, down markedly from 58.7 the previous month, the survey showed.
Growth in new export business, which returned to expansion only in November, eased as a surging pandemic restrained overseas demand.
The survey also revealed a further sharp rise in input prices, which led firms to increase their prices charged at the fastest pace since January 2008.
The loss of momentum was largely in line with the findings in an official survey released last week, which showed that activity for the catering industry had contracted.
The services sector, which had been slower to recover initially than the industrial sector, is more vulnerable to social distancing restrictions as the authorities race to tackle dozens of Covid-19 cases in northern China, including places such as Beijing, as well as Hebei and Liaoning provinces.
Chinese tourists, millions of whom have shunned overseas travel because of the global pandemic, are further narrowing the scope of their journeys, visiting nearby cities and avoiding trips out of their provinces.
However, Chinese services firms remained optimistic about the year ahead amid hopes of an end to the pandemic.
Business expectations over the next 12 months shot to the highest since April 2011, the survey showed.
Caixin's composite manufacturing and services PMI, also released yesterday, nudged lower to 55.8 last month, from 57.5 the previous month, also partly due to the drag in the manufacturing sector.
"Looking ahead, we expect the post-epidemic economic recovery to continue for several months, and macroeconomic indicators will be stronger over the next six months due to the low bases in the first half of 2020," said Mr Wang Zhe, senior economist at Caixin Insight Group, in a statement accompanying the data release.
"Meanwhile, we need to pay attention to the mounting pressure on costs brought by the increase in raw material prices and its adverse impact on employment, which is particularly important to figuring out how to exit the stimulus policies implemented during the epidemic," he said.
REUTERS
