By Gina Lee
Investing.com – China’s services sector saw a slowdown from the previous month’s decade-high growth in July, as new export business dropped and unemployment continues to increase, according to an industry survey.
The Caixin Services Purchasing Managers Index (PMI) for July was 54.1, remaining above the 50-mark separating contraction and expansion. But it fell from June’s reading of 58.4, the highest reading since April 2010.
Meanwhile, the Caixin Manufacturing Purchasing Managers' Index (PMI), released on Monday, saw a third consecutive month of expansion and the biggest increase since January 2011 as it rose to 52.8.
Comprising around 60% of the economy and half of the jobs in the country’s cities, the services sector has seen a slower recovery compared to large manufacturers. But although the sector saw a brief uptick as the government lifted COVID-19 lockdown measures, fresh COVID-19 outbreaks in the country and rising unemployment remain challenges to tackle.
“Employment was still a key problem. The combination of expanding demand and production with shrinking employment has dogged the economy for several months,” Wang Zhe, Senior Economist at Caixin Insight Group, told Reuters.
The government has introduced measures to help businesses, but Wang said that improving employment would take more time with companies tending to cut labor costs during tough economic times.
Meanwhile, service firms remain optimistic about business prospects overall as PMI readings continue to stay above expansion levels and point to continuing economic recovery from COVID-19.