By Doris Yu
Investing.com – China's Caixin survey said on Monday that China’s services sector grew at a slower pace in June, a 14-month low, due to a fresh outbreak of COVID-19 cases in Guangdong province. The survey also indicated that the economic recovery of the world’s second-largest economy may have started to slow down.
Data released earlier in the day said that the Caixin services purchasing managers index (PMI) in June was at 50.3, the lowest since April 2020. It was lower than May’s 55.1 figure but remained above the 50-mark indicating growth.
Meanwhile, Caixin manufacturing PMI in June, released on Thursday, was at 51.3, below the 51.8 figure in forecasts prepared by Investing.com and May’s 52 reading.
The data suggested that demand may have peaked in both the manufacturing and services sectors, and China’s economic recovery from COVID-19 is slowing down, some investors told Reuters.
Although China’s services sector rebounded slower than the manufacturing sector, it had been boosted by a gradual improvement in consumption in the previous months. However, an outbreak of COVID-19 in Guangdong province since late May and restrictive measures to curb the spread of the outbreak hurt consumer and business activity.
Even as the government took immediate measures to curb the virus' spread, the Caixin survey indicated that services providers' business outlook for the year ahead decreased to the lowest in nine months.
"The manufacturing industry has returned to normal in the wake of COVID-19, while the services industry is still sensitive to regional resurgences," Wang Zhe, Senior Economist at Caixin Insight Group, told Reuters.
"In addition, the low base effect from last year will continue to weaken in the second half of this year. Inflationary pressure, intertwined with the economic slowdown, will still be a serious challenge."