BEIJING (Reuters) – Activity in China’s services sector contracted at its fastest pace in two years in March as the resumption of the coronavirus epidemic reduced mobility and weighed on demand, shows the results of a private investigation released Wednesday.
The services PMI calculated by Caixin/Markit fell to 42.0 in March from 50.2 in February, falling below the 50 point mark that separates growth from contraction on a monthly basis. This reading indicates the largest drop in activity since the start of the pandemic in February 2020.
Analysts said the transport, hotel and restaurant sectors have been hardest hit, clouding the outlook for a recovery in consumption this year.
The new business sub-index fell for the second month in a row. Input costs rose in March after hitting a six-month low in February.
Although companies remain generally confident about output for next year, optimism has fallen to a 19-month low on worries about the pandemic and the economic fallout from the war in Ukraine.
The Caixin composite index for March, which includes both manufacturing and services activity, fell to 43.9 from 50.1 the previous month.
(Report Ellen Zhang, Stella Qiu and Ryan Woo; French version Camille Raynaud)
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