Growth in China’s services sector is slowing to its slowest pace in 14 months

Author: Doris Yu

Investing.com – China Caixin Survey showed on Monday that China’s services sector grew at a slower pace in June, the slowest in 14 months, due to a new Covid-19 outbreak in Guangdong province. The study also showed that the economic recovery in the world’s second-largest economy may have started to slow.

Data released earlier in the day showed the Caixin purchasing managers’ index (PMI) for services was 50.3 in June, the lowest level since April 2020. It was lower than May’s level of 55.1 but remained above the 50-mark growth rate.

Meanwhile, the Caixin Manufacturing PMI for June released on Thursday was 51.3, below Investing.com’s 51.8 forecast and May’52 reading.

Data suggests demand may have peaked in both manufacturing and services sectors, with China’s economic recovery from Covid-19 slowing, some investors say.

Although China’s services sector rebounded slower than its manufacturing sector, it was supported by a gradual improvement in consumption in previous months. However, the Covid-19 outbreak in Guangdong Province since late May and restrictive measures to curb the spread of the epidemic have hurt the activities of consumers and businesses.

Even though the government took immediate action to curb the spread of the virus, Caixin research showed that service providers’ business prospects for the coming year fell to the lowest level in nine months.

“The manufacturing industry has returned to normal following the Covid-19 pandemic, while the service industry remains vulnerable to the regional economic recovery,” Wang Zhe, senior economist at Caixin Insight Group, told Reuters.

“In addition, the low base effect of last year will continue to fade in the second half of this year. Inflationary pressure related to the economic slowdown will continue to be a serious challenge.”

Growth in China’s services sector is slowing to its slowest pace in 14 months

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