China’s services activity contracted for the third month in a row in April due to weakening demand both at home and overseas amid the coronavirus pandemic, a Caixin-sponsored survey showed on Thursday.
The Caixin China General Services Business Activity Index, also known as the Caixin China services PMI, which gives an independent snapshot of operating conditions in the services sector, rose to 44.4 last month from 43 in March. A number above 50 indicates an expansion in activity, while a figure below that points to a contraction. In February, the reading fell to a record low of 26.5 as the Chinese economy stalled amid the Covid-19 outbreak.
The services PMI’s April reading followed a contraction in the Caixin manufacturing PMI for the same month. The Caixin China Composite Output Index, which covers both manufacturing and service companies, came in at 47.6 in April, up from 46.7 in March, the survey showed Thursday.
“In April, the severe export shock on China’s economy had a knock-on impact on household income and consumption, as well as business investment,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group Ltd., a subsidiary of Caixin Insight Group. “As the recovery of domestic consumption was limited and increased infrastructure spending was not enough to offset the plunge in external demand, the country’s economy continued to decline year-on-year,” he said.