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China’s Feb services activity expands at slowest rate in six months -Breaking

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© Reuters. FILE PHOTO – Containers seen at Yangshan Deep Water Port, Shanghai, China as coronavirus (COVID-19), continues to spread, October 19, 2020. REUTERS/Aly SONG/File photo

BEIJING, (Reuters) – Activity in China’s services sector grew at the slowest rate in six months in February, as sprawling industries reel from tough government containment measures that stopped the spread of COVID-19 epidemics. A survey was released on Thursday.

Caixin/Markit’s services purchasing managers’ index (PMI) fell to 50.2 February. This is the lowest reading since August. Only a little above the 50-point threshold that distinguishes growth from decline on a monthly basis. In January, it was 51.4.

This was in contrast to the slight increase in growth of the services sector in an official survey that took place Monday. However, both surveys showed a softening trend as the sector remains susceptible to disruptions due to China’s zero COVID policy.

In recent weeks, more Chinese cities have been afflicted by COVID-19 infections. The number of local cases from Hong Kong is on the rise, but the overall numbers are still low compared to those elsewhere in China.

The February sub-index of new business in private surveys was 48.8, the first decrease since August 2013. This is because services companies reported that they had taken measures to limit COVID cases.

The second consecutive month of decline in exports was slower than the first.

This resulted in another drop in the payrolls of China’s service companies, though it was less severe.

“Demand and supply of services decreased at an accelerated pace, but demand declined.” According to Wang Zhe (Senior Economist, CaixinInsight Group), the spread of COVID-19 was detrimental for business operations in many regions.

Wang of Caixin Insight stated that policymakers must enhance support policies in order to promote employment, strengthen structural assistance for small and medium-sized businesses and reduce taxes and fundraising costs.

China’s economy recovered strongly after a 2020 pandemic-induced slump, but momentum began to slow in the summer last year as a result of a property crisis and tight anti-virus measures that hampered consumer spending and confidence.

The government has pledged to stabilize the economy this year, and top officials are focusing on the March 5th meeting of its highest legislative body. This annual meeting will see the unveiling of economic targets for 2012 and possible additional stimulus measures.

Inflationary pressures have also slowed down slightly, according to the survey. Although it was the 20th month of growth, the sub-index for input cost stood at 52.5.

However, confidence in the coming year rose to a three month high, as companies expect strong recovery from the pandemic.

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