More Chinese cities are battling local coronavirus cases in recent weeks, with infections from the city of Hong Kong surging, although the total number of cases pales in comparison with those in other countries.

A subindex for new business in the private survey stood at 48.8 in February, the first decline since August last year, as services firms reported measures to contain coronavirus cases, including the travel restrictions, impacted client demand.

New export business fell for the second straight month, although at a slower pace.

That led to another reduction of payrolls at China’s services firms, but the extent of decline eased.

“Demand for services contracted, while supply expanded at a limited pace. The spread of Covid-19 in several regions hurt business operations of service companies,” said Wang Zhe, senior economist at Caixin Insight Group.

“Policymakers should enhance support policies to encourage employment, strengthen structural support for small and mid-size enterprises and effectively reduce the tax burden and fundraising costs for companies.”

Top officials have vowed to stabilise growth this year and all eyes are on the annual meeting of its top legislative body that begins on Saturday, during which the government will unveil economic targets for the year and likely more stimulus measures.

The survey also showed inflationary pressures eased a bit. A subindex for input costs stood at 52.5, compared with 54.5 the previous month, although it marked the 20-month of growth.

Confidence towards the year ahead, however, picked up to a three-month high as firms expect a strong post-pandemic recovery.