China services activity shrinks further in November- Caixin PMI
2022.12.04 21:35
© Reuters.
By Ambar Warrick
Investing.com– China’s services sector contracted sharply in November, a private survey showed on Monday, as rapidly rising COVID-19 cases invited more lockdown measures and further disrupted economic activity.
The (PMI) read fell to 46.7 in November from 48.4 in the prior month, missing expectations of 48.0. The index marked its third straight month below 50, indicating a pronounced contraction in the sector.
The data comes in line with the results of an official survey released last week, which highlight deepening economic cracks in China due to its COVID-related restrictions. also shrank substantially over the past three months, with the Caixin composite PMI tumbling to 47 in November, showing an extended decline in business activity.
“Manufacturing and services activity contracted in varying degrees, with the services sector hit harder by Covid outbreaks… Since October, the impact of Covid outbreaks has taken a heavy toll on the economy, and the challenge of how to balance Covid controls and economic growth has once again become a core issue,” Wang Zhe, Senior Economist at Caixin Insight Group said in a note.
China imposed a slew of new lockdown measures in the past two months, as it grapples with a record-high rate of new infections. While economic activity did not weaken to the lows seen earlier this year, it dropped sharply from a mild recovery seen in July and August.
Public discontent with the anti-COVID measures sparked a swathe of unprecedented anti-government riots in late-November, an event that also likely impacted economic activity.
This pushed several cities into relaxing some anti-COVID measures, drumming up hopes that the country will enact a wider pullback of its strict zero-COVID policy, which is at the heart of its economic slowdown this year.
Recent media reports also suggested that Beijing is considering such a move.
But with stricter COVID restrictions remaining in place for the foreseeable future, the outlook for China’s economy continues to deteriorate. Optimism over a recovery in business activity slipped to an eight-month low in November, the Caixin data showed. Employment in the country also slipped at its fastest rate since February 2020.
The surged 0.7% on Monday, with markets focusing largely on the prospect of a Chinese reopening.
