China’s service sector expanded at a much slower pace in June as the recent uptick in COVID-19 cases and reduced travel dampened overall new business, survey results published by IHS Markit showed on Monday.
The Caixin services Purchasing Managers’ Index fell notably to 50.3 in June from 55.1 in May. Nonetheless, the index has remained above the neutral 50 mark for the fourteenth successive month. The slower upturn in business activity coincided with a softer increase in overall new work. New work from abroad meanwhile increased only marginally.
Employment across the service sector fell for the first time in four months.
On the price front, the survey showed that input price inflation eased to the lowest since September 2020. Services companies lowered their average output charges for the first time in nearly a year in June.
Although services companies remained strongly upbeat regarding the year-ahead outlook for activity, the resurgence of the COVID-19 virus dampened overall optimism in June. Moreover, the degree of positive sentiment slipped to a nine-month low. The composite output index that measures the overall performance of manufacturing and services, slipped to 50.6 in June from 53.8 in May. The rate of growth was the softest seen in the current 14-month period of expansion and only marginal.