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Dow Jones Newswires: China Caixin services PMI drops to lowest level in more than 2 years

A private gauge measuring activity in China’s services sector tumbled to its lowest level since the initial onset of the pandemic in February 2020, as the escalation of measures to contain the spread of the virus weighed heavily on customer demand.

The Caixin services purchasing managers index dropped to 36.2 in April from 42.0 in March, Caixin Media Co. and research company IHS Markit said Thursday. The reading continued to be sharply below the 50 mark that separates contraction from expansion.

The index pointed in the same direction as the official non-manufacturing PMI, which includes both services and construction activity. China’s official non-manufacturing PMI increased to 41.9 in April from 48.4 in March, the statistics bureau said Saturday.

“Both activity and new orders fell at the second-sharpest rates since the survey began in November 2005, and were exceeded only by those seen at the initial onset of the pandemic in February 2020,” Caixin said in a statement.

Over the recent five-day labor holiday, which ended Thursday, Chinese travelers made 160 million trips, down more than 30.2% from a year earlier and equivalent to 66.8% of trips made over the holiday in 2019, China’s Ministry of Culture and Tourism said Wednesday.

In Thursday’s data, a subindex gauge of export orders declined at the sharpest rate since May 2020, while one for employment in the services sector dropped slightly after being in contraction territory for four consecutive months, Caixin said.

The companies surveyed for the index noted a softer but still solid rise in average input costs during April, driven by higher prices for raw materials, fuel and expenditure on measures to limit the spread of COVID, said Caixin.

“The new round of COVID-19 outbreaks hit the service sector hard,” said Wang Zhe, a senior economist at Caixin Insight Group.

Entrepreneurs were confident that the COVID outbreaks would be brought under control, although some expressed concern that the control measures would be in place for too long, he added.

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