There’s further confirmation that the Chinese economy is in a deep recession.
Two surveys of China’s service sector activity showed record falls, days after two similar surveys showed a similar situation in the country’s huge manufacturing sector.
The manufacturing sector surveys came from the National Bureau of Statistics and Caixin/Markit, and both provide the service sector result – in all cases the readings were record lows (a reading of 50 is neutral – above that figure is expansion, under it is contraction). The readings for January have the lowest so far recorded.
The Caixin/Markit China services purchasing managers index fell to a record low of 26.5 in February from 51.8 in January, That reading was well below the 50 mark that separates expansion from contraction.
The NBS survey showed a fall to a record low of 29.6 from 54.1 in January.
Economists say the survey results show the Chinese economy is now in a deep recession and no amount of quick stimulus will alter that until the impact of the coronavirus exhausts themselves later this year.
The Official NBS Non-Manufacturing PMI in China showed there were sharp falls in new orders (26.5 vs 50.6 in January), employment (37.9 vs 48.6) input costs (49.3 vs 53.3) and output charges (43.9 vs 50.5). Finally, business confidence plunged (40.0 vs 59.6).
The Caixin/Markit China General Services PMI showed new orders, exports and employment all fell at the steepest rates on record.
That saw backlogs of work rise substantially. Operating expenses declined at the fastest rate since the data collection started over 14 years ago, and selling prices were cut for the third in a row, and at a steeper rate. Business sentiment slipped to a survey low.
That’s all very similar to the readings from the two manufacturing surveys.
“The coronavirus epidemic has obviously impacted China’s economy,” Zhengsheng Zhong, director of Macroeconomic Analysis at CEBM Group, said in a statement accompanying the Caixin data.
China’s trade data for January and February are out tomorrow (Saturday) and the figures, though combined, are likely to be rotten.
