China’s Caixin PMI for Services Declined at Slower Pace in December

Photo Credit: China Daily

The services activity in China posted a slower decline in December as surging COVID infections hit demand.

The decline was measured by Caixin/S&P Global services purchasing managers’ index (PMI) at 48.0 in December, which remained below the 50-point mark, which indicates contraction in activity, for a fourth straight month.

However, it should be noted that the PMI for services for December improved as compared to November, which was registered at 46.7. The pace of decline showed early signs of reversal when the business confidence rose to a 17-month high.

To recap, in early December China abruptly removed its stringent zero-COVID strategy after rare public protests over the protracted curbs, triggering a surge COVID infections across the country.

According to the survey, companies reported falls in output and new work for the fourth straight month in December, and external demand fell into contraction from growth the previous month.

However, the silver lining is that those companies surveyed by the Caixin/S&P survey have expressed their optimism over recovery prospects for the next 12 months thanks to the lifting of COVID restrictions that could lead to increased consumption, with the confidence index rising to a 17-month high.

Mainland Chinese leaders have pledged to focus on stabilising the economy in 2023 and step up policy adjustments to cushion the impact from a surge in COVID infections at a time when a weakening global economy is hurting exports.

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