BEIJING (Reuters) – China’s services sector activity slowed at a 10-month pace in February as companies struggled with slow demand and high costs, a private sector study showed Wednesday, forcing jobs to cut.
Caixin / Markit’s Purchasing Managers of Services Index (PMI) fell to 51.5, the lowest level since April, from 52.0 in January but remained above the 50 mark that separates growth from a monthly downturn.
The subprime for employment was at 47.9, declining to a shortfall after six months of growth, as businesses halted workers, the study showed. New export business also traveled after expanding for three months.
The loss of the hour came when China faced coronavirus outbreaks at the beginning of the year, while demand from abroad was still hit by the COVID-19 pandemic. The findings were largely in line with an official study published Sunday.
“The recovery movement has reduced post-epidemic services,” Wang Zhe, senior economist at Caixin Insight Group, said in a statement accompanying the data release.
“Service providers are cutting staff to reduce costs as market sentiment has had a weak effect on the labor market. ”
The services sector, which had been slower to recover from the pandemic than the industrial sector, is more vulnerable to social distance restrictions.
But domestic cases of COVID-19 have stalled in China since early February and analysts expect a strong reversal in full-year growth.
February also saw the New Year’s holidays, when many workers return to their homes, although this year saw many fewer trips amid coronavirus fears.
Costs for utility companies continued to grow rapidly, albeit at a slower pace than the previous month.
But Chinese services companies remained optimistic about the year ahead, with business expectations over the next 12 months rising from January.
Caixin’s manufacturing and services PMI, also announced Wednesday, slipped to 51.7 in February, from 52.2 the previous month.
Reporting by Gabriel Crossley; Edited by Ana Nicolaci da Costa