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Dow Jones Newswires: China service-sector activity continued to fall in December

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A private gauge of China’s service-sector activity improved in December but stayed in contraction territory, as COVID-19 infections swept the country after an abrupt reopening during the month.

The Caixin services purchasing managers index rose to 48.0 in December from 46.7 in November, Caixin Media Co. and S&P Global said Thursday.

It was the fourth straight month that the index stayed below the 50 mark, which separates expansion from contraction.

Total new orders decreased for the fourth consecutive month in December, but at a slower pace than in November, while new export orders declined for the second time in three months, according to Caixin.

Caixin said the employment subindex continued to deteriorate in December, with workers leaving their jobs and businesses cutting staff to contain costs.

However, a subindex measuring expectations for future activity rose nearly four points from November, logging the highest reading since May 2021, Caixin said.

“Optimism improved significantly. Service providers expressed strong confidence in an economic recovery following the easing of Covid containment measures,” said Wang Zhe, a senior economist at Caixin Insight Group.

Beijing eased most of its COVID-related controls in December, which had been the biggest constraint for businesses, especially the close-contact service sector, during the pandemic years. However, the reversal of COVID rules also resulted in widespread outbreaks across the country, disrupting business and consumer spending.

A competing official gauge painted a different picture of the service sector in December.

China’s official nonmanufacturing PMI, which covers service-sector and construction activity, plunged to 41.6 from 46.7 in November. The index was weighed mainly by the service sector, which fell to 39.4 in December from November’s 45.1, according to data released last week by the National Bureau of Statistics.

Compared with the Caixin PMIs, the official gauges track more big companies and sample a larger number of respondents compared with Caixin. The two sets of data often point in different directions as the operating environment may differ for companies with different sizes.

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