By Gina Lee

Investing.com – China’s fell at the sharpest pace in two years in March 2022, a private sector survey showed on Wednesday. The survey also showed that the country’s latest outbreak led to restricted mobility and weighed on demand.

This was 42 compared to the 50.2 from the prior month. This was below the 50 mark, which indicates growth. It also saw the steepest decline in activity since February 2020 with the outbreak of the COVID-19 pandemic.

Released earlier this week, it was 48.1. It was 49.5 and it was 48.4.

Analysts say that the worst hit sectors were those that are contact-intensive, such as catering, transportation and hotel. This has impacted the prospects for an increase in consumer spending in 2022. In turn, the Employment Sub-index fell due to decreased demand and COVID-19’s latest outbreaks.

Firms were generally positive about the future of output, but optimism fell to a low 19-months ago due to concerns about COVID-19 as well as the economic effects of war in Ukraine.

Due to the outbreak, “Overall both manufacturing and service activities suffered in March.” The epidemic was similar to other COVID-19-related outbreaks in China. Wang Zhe, senior economist at Caixin Insight Group said that the service sector suffered more than manufacturing in the accompanying statement.

For market stability, policymakers need to look out and support vulnerable groups.

As China’s economy faces serious challenges, the key question is how long the country’s zero-tolerance COVID -19 policy can be sustained, Pinpoint Asset Management chief economist Zhiwei Zhang said in a note.

To achieve better policies against omicron epidemics, economic activities were sacrificed. I expect the outbreaks will be brought under control, with significant economic costs,” the note added.