(Yicai Global) March 3 -- China’s service sector activity expanded at the slowest pace in six months in February due to Covid-19 outbreaks and measures to contain them, according to a widely watched independent survey.

The Caixin purchasing managers’ index for services stood at 50.2 last month, down from 51.4 in January and the lowest since last August, data released by financial media group Caixin showed today. A level above 50 indicates expansion.

The Caixin PMI for manufacturing in February, released yesterday, recovered from a 23-month low the month before to return to positive territory at 50.4. The composite PMI was unchanged at 50.1, indicating a slight expansion.

Manufacturing demand has significantly improved this year but the impact on the services sector has been bigger, said Wang Zhe, senior economist at Caixin Insight Group. The economy was still under pressure between January and February as a resurgence of Covid-19 in some areas hit sales and transport, he added.

“Policymakers should enhance support policies to encourage employment, strengthen structural support for small- and mid-sized companies, and effectively reduce the tax burden and fundraising costs,” Wang noted. “Meanwhile, they should maintain a stable market environment, continue to stabilize commodity supply and prices, and lighten the cost burden on businesses in the middle and lower reaches of supply chains.”

Caixin’s data were not in line with those from the National Bureau of Statistics. The official services PMI rose to 50.5 in February from 50.03 the previous month, while the manufacturing PMI gained to 50.4 from 50.03, driving the composite PMI to 51.2 from 51.

New orders fell to a 21-month low and, due to the lingering pandemic overseas, new export orders remained below 50 for the second consecutive month, despite recording a smaller drop, data from the survey showed.

But market optimism recovered. Companies surveyed expect the pandemic to ease this year, demand to rebound, and new product launches to drive activity growth over the next year.

Editors: Dou Shicong, Futura Costaglione