Latest data shows that China’s services activity in November contracted to the lowest level in six months as its controversial COVID-control measures hurt demand and business operations amid an economic downturn. 

Reuters reported that Caixin/S&P Global services purchasing managers’ index (PMI) further fell to 46.7 in November, down 48.4 from a month earlier. This is the third consecutive month of contractions in China’s services activity. A reading of PMI below 50 reflects contraction, while above indicates expansion.

Caixin/S&P’s composite PMI, which gauges both manufacturing and services activity, also dropped to 47.0 in November, down from 48.3 in October. Declines in manufacturing and service sector output caused the fall.

Wang Zhe, senior economist at Caixin Insight Group, told Reuters, “Since October, the impact of COVID outbreaks has taken a heavy toll on the economy, and the challenge of how to balance COVID controls and economic growth has once again become a core issue.” 

Wang added, “The market is in urgent need of policies to promote employment and stabilize domestic demand. Beijing should further coordinate fiscal and monetary policies to expand domestic demand and boost incomes of the poorer parts of the population.”

Caixin’s data follows official data from China’s National Bureau of Statistics released on November 30, which saw the country’s factory and services activity shrank further in November to seven-month lows.

Firms in the Caixin/S&P survey posted record falls in output and new work for the past six months. Their confidence in the outlook in the sector for the next 12 months dropped to an eight-month low.

Nomura estimated that the locked down areas in China represented about 25% of its gross domestic product, hitting domestic consumption and causing supply chain disruption.

China has surging COVID infections in November as it faces unprecedented protests across the country due to brutal lockdowns that killed at least ten people in Xinjiang. 

Due to pressure from widespread protests, Beijing seems to be loosening some COVID restrictions on testing and quarantine requirements in several Chinese cities.

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