China’s services and factory activities were both severely restricted in March amid the latest outbreak of COVID-19 cases in multiple places across the country, according to the latest survey revealed by Caixin on Wednesday.
Caixin services Purchasing Managers’ Index (PMI) fell to 42.0 in March from 50.2 in February, below the 50-point mark that separates growth from contraction on a monthly basis, marking the sharpest decline since March 2020 during the initial outbreak of the COVID-19 pandemic.
The supply and demand of services industry has contracted severely. The services industry business activity index fell sharply in March, falling below the 50-point mark for the first time in nearly seven months, and the sub index for new orders continued to decline, hitting the lowest since April 2020 and still remaining in the contraction range.
As reflected by the surveyed respondents, the severe contraction was mainly related to the latest wave of COVID-19 cases and strict epidemic prevention measures accordingly.
The Chinese mainland reported 1,383 new locally-transmitted COVID-19 cases for Tuesday, the National Health Commission said Wednesday. Of the local confirmed cases reported on Tuesday, 973 were in North China’s Jilin Province, 311 in Shanghai, and 17 in East China’s Zhejiang Province.
The epidemic situation overseas also continued to weigh down export orders. The sub index of new export orders in the services industry declined to the lowest since November 2020.
In face of rising uncertainty, optimism held by the services market was weakened in March, with the expectation index falling to the lowest level since September 2020. Some surveyed companies believe that the pandemic will be brought under control, and the market will usher in recovery, while others are worried that the pandemic will continue to disrupt business operations, according to the Caixin survey.
Wang, a Beijing-based teahouse owner, told the Global Times that her business was affected severely by the latest COVID-19 flare-ups with fewer customers visiting brick-and-mortar stores. “In order to make up for the losses, I have registered as a Didi driver and pick up orders sometimes,” she said.
Factory activity also slumped at the fastest pace in two years in March. The Caixin/Markit manufacturing PMI fell to 48.1 from 50.4 in the previous month.
Both the services and manufacturing indexes brought the Caixin composite PMI down to 43.9, the steepest rate of contraction since March 2020.
Wang Zhe, a senior economist at Caixin Insight Group, said that compared with the manufacturing sector, the services industry has been delivered a hard blow by the epidemic, and the unclear prospect of Russia-Ukraine conflict has also further exacerbated the uncertainties.
The Caixin survey data was mainly in line with those released by the National Bureau of Statistics, which showed that PMI for China’s manufacturing sector came in at 49.5 in March, and PMI for the non-manufacturing sector at 48.4.
Only a few people walk along the normally bustling Nanjing Road pedestrian street in Shanghai on March 29, 2022 as the city battles an ongoing COVID-19 outbreak. Photo: Wu Chuanhua/Global Times
