(S&P Global) China’s headline Business Activity Index was posted at 41.4 in May, the third straight month the gauge has indicated contraction in the service sector.
The contraction in the service sector was attributed to the Covid-19 impacts, with demand conditions and client numbers subdued. The index was still a jump from a 26-month low of 36.2 in April.
Export orders declined for the fourth consecutive month. The sub-index for employment was at 48.5, its lowest since February 2021, and below 49.3 in April.
Costs continued to rise, although the rate of input price increases was the slowest in nine months.
Analysts said the shortfalls in China’s service sector, which accounts for nearly 60% of the economy, are likely to continue if the government continues with the zero-Covid-19 policy. Hotels and restaurants were the most hit.
Firms still maintained optimism on the 12-month outlook. The expectations for an output increase rose to the highest in three months on the confidence of easing of restrictions and containment of Covid-19.
CSI 300 is up +1.87%, USDCNY is down -0.23%.
