China’s services sector expanded in January at a slow pace in five months as COVID-19 restrictions are put on place hurting business and consumer sentiment, a private survey on Monday showed.
The Caixin/Markit services Purchasing Managers’ Index (PMI) dropped to 51.4 in January – the lowest since August – from 53.1 in December. The 50-point mark separates growth from contraction on a monthly basis.
The numbers likely to reinforce market expectations that policymakers needs to put in place more policy support to stabilize the economy.
China’s central bank has already started cutting interest rates and pumping more cash into the financial system to bring borrowing costs down, and further easing steps are expected in coming weeks.
“In December and January, the resurgence of COVID-19 in several regions such as Xian and Beijing forced local governments to tighten epidemic control measures, which restricted production, transportation and sales of goods,” said Wang Zhe, senior economist at Caixin Insight Group, in a statement accompanying the data release.
“This year, policymakers should make stability their focus. They should prioritize improvements to employment and optimize the structure of the economy.”
