The Chinese service sector signaled a new decline business August activity, as the increase in coronavirus infection at home and abroad affected operations and demand, IHS Markit’s survey results on Friday showed.
The Caixin Services Purchasing Managers’ Index fell to 46.7 in August, from 54.9 in July. A reading below 50 indicates the contraction of the sector.
According to an official survey released earlier this week, the non-manufacturing index (PMI), which measures the performance of the services and construction sectors, fell to 47.5 in August, from 53.3 a month ago.
The volume of new orders from service companies fell for the first time in 16 months in August, said IHS Markit. For the second time in three months, service providers have signaled a slight decline in employment.
Lower staff levels and pandemic interruptions led to the second consecutive monthly increase in the volume of outstanding companies.
Input prices rose moderately, largely due to higher staff costs and higher transport costs. At the same time, production prices fell after a sharp rise last month.
Service companies in China remained optimistic towards the turn of the year at the turn of the year in August, as the generally expected activity of companies is increasing.
The combined output index was 47.2 in August (53.1 in July), signaling a new decline in overall business activity across China. Although moderate, this was the first decline in output since April 2020, the study showed.
“Official economic performance in July was worse than expected from the market, indicating growing pressure on growth,” said Wang Zhe, senior economist at Caixin Insight Group.
Wang added that the authorities need to look holistically and balance the goals of curbing Covid-19, stabilizing the labor market, and maintaining price and supply stability.
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