China’s services activity slumped to its weakest level in more than two years in April.as Covid outbreaks and lockdowns continued to hit consumer spending and threaten economic growth.
Caixin China Services Purchasing Managers’ Index fell to 36.2 in April, the lowest since February 2020, Caixin and S&P Global said in a statement on Thursday. That was below the median estimate of 40 in a Bloomberg survey of economists and was the second month below 50, marking a contraction in output.
China’s economy is recovering from a series of restrictions to contain the rapidly spreading virus. The April data captures the impact of the lockdown in Shanghai, where millions of residents were confined to their homes for weeks.
“The new round of Covid-19 outbreaks hit the service sector hard,” Wang Zhe, senior economist at Caixin Insight Group, said in the statement.. “Both the services PMI and the new business measure fell to the lowest level since February 2020 as regional Covid outbreaks limited both supply and demand.”
The private survey findings are largely in line with the gloomy picture from the official Non-Manufacturing Purchasing Managers’ Index released over the weekend. That gauge also fell to its worst level since February 2020, when China was battling the initial outbreak of the virus in Wuhan. The official survey tracks the largest companies and includes the construction sector, while the Caixin survey focuses more on smaller ones.
Virus outbreaks continued into May, with cases in Beijing prompting local authorities to lock down parts of the capital city and launch mass testing rounds.
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