After the manufacturing sector, the purchasing managers’ index is also down, weighed down by the “zero Covid” strategy.
Activity in services in China contracted again in October, due to anti-Covid restrictions which penalize consumption and tourism, according to an independent index published on Thursday. The purchasing managers’ index (PMI), calculated by IHS Markit and published by the media group Caixin, stood at 48.4 points in October, against 49.3 a month earlier. This index fell in September, for the first time since May, below the 50 mark, which reflects a contraction in activity.
In August, however, activity in services still posted one of its highest levels since 2021, galvanized by the recovery after a start to the year marked by health restrictions which had weighed on consumption.
“Zero Covid” strategy
China continues to follow a strict zero Covid strategy despite having a much lower number of contaminations than the rest of the world. This policy results in multiple confinements as soon as positive cases appear, in quasi-compulsory PCR tests several times a week or even in quarantine. A strategy recently reinforced as the number of cases increases in the country, like the confinement decided on Wednesday, for a week, of the area around the factory which manufactures the majority of iPhones in the world in Zhengzhou (center) , after the discovery of an outbreak of Covid-19.
“With the strengthening of Covid prevention and containment measures due to sporadic outbreaks in many regions, service activity contracted for the second consecutive monthcommented for Caixin the economist Wang Zhe. Between June and August, this sector, which includes tourism, transport and catering, experienced a strong recovery.
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For its part, the composite index, which combines services and manufacturing industry, also fell in October, to 48.3 points against 48.5 the previous month. Beijing has set itself the goal this year of increasing its gross domestic product by around 5.5%. But many economists doubt it will be achieved due to the zero Covid strategy which is hampering the recovery.