China’s services PMI contracts for the first time since 2020 pandemic

A Meituan grocery courier delivers a resident of the city on Nov.

Yang Huafeng | China Intelligence Service | Getty Images

BEIJING – China’s service industry contracted in August for the first time since the peak of the pandemic early last year, according to official data released on Tuesday.

The monthly corporate survey by the National Bureau of Statistics found that the purchasing managers’ index (PMI) for the non-manufacturing sector fell from 53.3 in July to 47.5 in August.

The latest reading also marked the first drop below the 50 mark since February 2020, when China shut down more than half of the country to contain the coronavirus. Values ​​below 50 indicate a decrease in business activity compared to the previous month, while values ​​above 50 reflect an expansion.

The month’s decline in the PMI for services was due to the proliferation of the highly contagious Delta variant in late July and August prompting Beijing and many other major cities to announce travel restrictions and bans on some shared apartments.

By last week, daily reports of new domestically transmitted cases had dropped to zero, and the National Health Commission said the risk of a nationwide outbreak had been contained.

The official purchasing managers’ index for the manufacturing sector showed business activity rose for the 18th consecutive month at 50.1 in August. That was slightly below the 50.2 level forecast by a Reuters poll.

China became the first major economy to contain the coronavirus pandemic last year. Retail sales, however, lagged the general recovery and fell below expectations in July amid uncertainty over new regulations and employment prospects.

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