Coronavirus: China’s services industry continued to struggle in April despite lockdown lift

Caixin/Markit services purchasing managers’ index (PMI), which focuses on smaller, private firms, rose slightly to 44.4 last month, from 43.0 in March

But with the sector remaining in contraction, the pressure remains on smaller firms even as the country slowly begins to return to normal

Reading Time:2 minutes

China only emerged from over two months of nationwide lockdowns to control the spread of the coronavirus at the start of April, restrictions which had severely impacted China’s services industry which includes retail and catering. Photo: AFP

Published: 10:04am, 7 May 2020Updated: 10:29pm, 7 May 2020

China’s services industry continued to struggle in April, despite the country slowly beginning to return to normal after the social and economic disruptions caused by the coronavirus outbreak, a survey released on Thursday showed.

The Caixin/Markit services purchasing managers’ index (PMI), which focuses on smaller, private firms, rose slightly to 44.4 last month, up from 43.0 in March, suggesting that the sector remained in contraction and that China’s economic recovery will be slow.

It was much worse than analysts’ expectations, with the median forecast from a Bloomberg survey having predicted a rise to 50.1. A reading above 50.0 indicates growth in sector activity, while a reading below indicates a contraction.

This marked a third straight month of contraction for China's services industry, according to the Caixin/Markit PMI. The sector is an important generator of jobs and accounts for around 60 per cent of the economy. In February, it fell over 25 index points to a record low of 26.5 from 51.8 in January.

Domestic services activity remained under notable pressure amid the coronavirus pandemic

Zhengsheng Zhong

“Domestic services activity remained under notable pressure amid the coronavirus pandemic,” said Zhengsheng Zhong, chairman and chief economist at CEBM Group.

“Falling overseas demand dragged on the services sector. The gauge for total new business remained in contractionary territory but improved somewhat from the previous month. The measure for new export business dropped to the second lowest level since the data series began in September 2014, just above the February reading. The gauge for outstanding business fell further into negative territory, reflecting sluggish demand.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x