Chinese services sector grows at slowest pace in ten months

A private sector survey showed on Wednesday China’s services sector expanding at its slowest pace in ten months, in February. The slow pace of the sector’s growth was due to job cuts as companies faced low demand and higher costs.

The Caixin services purchasing managers’ index (PMI), posted a 51.5 reading, slightly lower than the 52 posting in January. Earlier in the week, the Caixin manufacturing PMI was at 50.9, missing the 51.5 forecasts and January’s 51.5 figure.

The survey also highlighted a sub-index for employment dipping into contraction at 47.9 reading following a six-month expansion as companies slashed jobs.

Analysts said the loss of momentum was caused by the new outbreak of COVID-19 cases in the country at the beginning of 2021. The coronavirus pandemic also continually affects overseas demand. The services sector, which is recovering from COVID-19 slower than the industrial sector, has also become more vulnerable to the strict pandemic measures implemented to curb the outbreak.

Despite the weak data, Chinese services firms are still optimistic about the year ahead.