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China's economic recovery
EconomyChina Economy

China’s economic recovery woes increase as services sector activity contracts

  • China’s official non-manufacturing purchasing managers’ index (PMI) – which measures morale in the services and construction sectors – fell to 47.5 in August
  • The official manufacturing PMI – a survey of sentiment among factory owners – fell to 50.1 in August, from 50.4 in July

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China’s official manufacturing purchasing managers’ index (PMI) fell to 50.1 in August, from 50.4 in July. Photo: AFP
Andrew Mullen

China’s services sector activity contracted in August to the second-lowest level on record, further adding to evidence of a slowing economy after the key indicator missed expectations.

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The official non-manufacturing purchasing managers’ index (PMI) – which measures morale in the services and construction sectors – fell to 47.5 in August, from 53.3 in July, data from the National Bureau of Statistics (NBS) showed on Tuesday.
The figure was below the median forecast of a Bloomberg survey of analysts, which had predicted a fall to 51.9. It is the lowest figure since the index slumped to an all-time low of 29.6 in February 2020 after China began lockdowns to control the initial spread of the coronavirus pandemic.

The slowdown was driven by a steep fall in the services index from 52.5 to 45.2, attributed to coronavirus restrictions being reimposed and consumers becoming more cautious. The construction index, though, rebounded to 60.5 in August from 57.5.

A reading above 50 indicates growth in sector activity, while a reading below the mark represents contraction. The lower the reading is below 50, the faster the pace of contraction.

This wave of [coronavirus] outbreaks in many provinces have dealt a significant blow to the service sector that is still on the way to recovery
Zhao Qinghe

“This wave of [coronavirus] outbreaks in many provinces has dealt a significant blow to the service sector that is still on the way to recovery,” said Zhao Qinghe, a senior statistician at NBS.

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