Consumption held back by Covid-19
China‘s services sector contracted in August, official figures revealed on Tuesday, as Covid-19 held back consumption.
The official non-manufacturing Purchasing Managers’ Index (PMI) was recorded at 47.5 in August against 53.3 the month before.
Anything above the 50-point mark represents growth while anything below is a contraction.
A steady upturn in consumption boosted the service sector over recent months, although it was slower to recover from thee pandemic than manufacturing.
However, an outbreak of the coronavirus resulted in strict lockdown measures, which negatively impacted business activity.
Kyle Rodda of IG told the Guardian that the PMI figures are ‘highly disappointing’, and suggest that the China economy is facing a slowdown.
“The manufacturing survey only missed estimates marginally, printing at 50.1 versus the 50.2 consensus forecast. But the non-manufacturing survey was a true stinker, with the headline number plunging to a contractionary 47.5, down from 53.3 last month and well below the expected 52.1 figure.”
“Though obviously it doesn’t tell the whole story for China’s economy, the PMIs were the weakest since the COVID-19 collapse of February 2020, and reveal the impact of last month’s Delta outbreak on the country, amidst what’s a clear trend of weakening growth.”
