China's services sector expanded at the slowest pace in nine months in January as the ongoing the coronavirus pandemic dampened customer demand, according to the latest Caixin/Markit survey of purchasing managers in the country.
The survey, focused on 400 private service sector companies in mainland China, fell to 52.0 for the first month of 2021 from 56.3 in December last year, which marked the second straight monthly decline. A reading of 50 and above denotes expansion, while a figure below 50 signals contraction.
"The services sector's post-epidemic recovery continued, but at a much slower pace," said Wang Zhe, senior economist at Caixin Insight Group.
"Service providers stayed positive overall about the economic recovery, but they remained worried about the uncertainties brought on by the epidemic," said Wang.
Companies faced a mix of slower price rises and increases in raw material, labor and transportation costs that pushed average operating expenses higher in January. The rate of cost inflation quickened to the second-fastest pace since April 2012, according to the survey.
New orders from overseas in the past three months increased at the weakest pace since November.
"Some surveyed enterprises said the services market continued to recover, while many said the market had been hurt by the resurgence of the Covid-19 pandemic," said Wang.
Compared to the industrial sector, the services sector is slower to recover from the COVID-19 pandemic with several cities in the north locked down in January owing to small-scale outbreaks. Analysts said the lockdowns contributed to the loss of momentum in service sector.
January factory activity in China expanded at its slowest pace in seven months, according to the private Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) on Monday.
The Caixin/Markit survey, focused mainly on smaller manufacturers, showed the January PMI at 51.5, down from 53.0 in December.
The survey followed a China release from the National Bureau of Statistics on Sunday focused on larger state-owned firms shat showed the official PMI as 51.3 in January from 51.9 in December.