ACTIVITY in China’s services sector contracted at the sharpest pace in two years in March as a surge in coronavirus cases restricted mobility and weighed on demand, a private sector survey showed yesterday.

The Caixin services Purchasing Managers’ Index (PMI) dived to 42 in March from 50.2 in February, dropping below the 50-point mark that separates growth from contraction on a monthly basis.

The survey, which focuses more on small firms in coastal regions, tallied with an official survey, which also showed deterioration in the services sector.

Analysts say contact-intensive services sectors such as transportation, hotel and catering were hurt the most, clouding the outlook for a much anticipated rebound in consumption this year.

A sub-index for new business fell for a second consecutive month, and at the fastest pace since March 2020.

Firms’ input prices rose in March after easing to a six-month low in February.

While firms remained generally upbeat about output over the next year, optimism slipped to a 19-month low amid concerns over the pandemic. (SD-Agencies)