China’s services activity contracted for the third consecutive month in May, reflecting a delayed recovery despite the lifting of some COVID lockdowns in Shanghai, according to a private business survey released on Monday.
The Caixin services purchasing managers’ index (PMI) increased to 41.4 in May, up from 36.2 in April’s reading. Still, the monthly figure remained considerably below the 50-point threshold that distinguishes growth from contraction, despite China beginning to ease some of the strict restrictions that have freezed Shanghai’s financial district and disrupted global supply chains.
The services sector, which represents approximately 60 percent of China’s economy and 50 percent of urban jobs, is expected to remain sluggish under the government’s zero-COVID policy, with contact-intensive industries such as hotels and restaurants suffering the most, said the analysts.
The survey also revealed that the services sector was still mired in contraction.