Activity in services in China plunged in March to its lowest level since the first wave of Covid in early 2020, due to an epidemic outbreak, according to an independent index published on Wednesday.
The purchasing managers’ index (PMI), calculated by IHS Markit and published by the media group Caixin, stood at 42.0 against 50.2 in February.
This is significantly less than the forecast of analysts polled by Bloomberg (49.7).
A number above 50 indicates an expansion in activity and below that indicates a contraction.
Since March, an epidemic outbreak, the strongest since the beginning of 2020, has affected almost all the provinces of China.
It has led to travel restrictions and confinements of tens of millions of people, particularly in the northeast of the country and in Shanghai, the economic capital of China.
With Chinese people traveling and consuming less, air carriers, businesses, restaurants and even tourism professionals are suffering.
Activity had not contracted as much since February 2020, when almost the entire population was confined to Covid-19. The PMI then fell to 26.5.
Another difficulty: respondents reported a sharp rise in March in the costs of raw materials, energy, food and transport.
Faced with these problems, the pandemic and the war in Ukraine, business confidence in the future has also fallen to a year and a half low, according to the Caixin-Markit survey.
As a logical consequence of the difficulties in the sector, service providers continued to reduce their workforce for the third month in a row.
For its part, the composite index, which combines services and manufacturing industry, fell in March to 43.9 – against 50.1 the previous month.
Followers of the restrictions in the face of Covid, policymakers must “strike a balance between maintaining a normal life and protecting the health of the population”, commented for Caixin the economist Wang Zhe.
They will also have to “strengthen support for important sectors and small and micro-enterprises in order to stabilize market expectations”, he underlined.
This article has been published automatically. Sources: ats / awp / afp