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Services sector PMI data shows China’s recovery is beginning to slow

Salespeople wait for customers at booths selling mobile phones in Beijing in this file photo from Sept 2013. Pic: Kim Kyung-Hoon/ Reuters.

The latest data for June suggests that growth in the world’s second largest economy may be losing momentum; but a Covid outbreak in Guangdong in southern China is one reason why this occurred, analysts say


(AF) A resurgence of Covid-19 cases in southern China was a factor behind the slowdown in growth in the country’s services sector, which faltered in June to a 14-month low, a private survey showed on Monday.

The latest data added to concerns that the world’s second-largest economy may be starting to lose momentum.

The Caixin/Markit services Purchasing Managers’ Index (PMI) fell to 50.3 in June – the lowest since April 2020 – and down significantly from 55.1 in May. But it remained above the 50-mark, which separates growth from contraction on a monthly basis.

China‘s official services gauge also showed a marked slowdown in June, though it also remained well in expansion territory. The private survey is believed to focus more on smaller companies.

Coupled with a slowdown in the manufacturing sector, analysts say the PMI survey findings suggest that pent-up Covid demand may have peaked and China‘s robust economic rebound from the crisis is starting to moderate.

Though slower to recover from the pandemic than manufacturing, a gradual improvement in consumption in recent months had boosted China‘s services sector.

However, a Covid-19 outbreak of the more infectious Delta strain in the export and manufacturing hub of Guangdong since late May and the subsequent imposition of anti-virus measures has restricted production.

The official non-manufacturing Purchasing Managers’ Index (PMI) fell to 53.5 in June from 55.2 in May, data from the National Bureau of Statistics (NBS) showed

Analysts say China‘s economic recovery is moving in a more even direction, as the consumption and service sectors are catching up to exports and manufacturing.

The official June composite PMI, which includes both manufacturing and services activity, fell to 52.9 from May’s 54.2.

The softer results in the private survey, mostly covering export-oriented and small manufacturers, are in line with those in an official survey, which showed factory growth dipped to a four-month low due to the drag from production.

A sub-index for output dropped to 51.0 in June, the lowest since March 2020, when the industrial sector started to rebound from Covid-induced paralysis. The growth in new orders also eased to a three-month low.

New export orders barely grew, compared with a robust expansion the previous month as rising Covid-19 cases across the world, especially of the more infectious Delta variant, took a toll on demand.

With reporting by Reuters



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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.


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