(Yicai Global) Nov. 2 -- Activity in China’s service sector in October fell to the lowest level since June and remained in negative territory for the second straight month, as the fallout from Covid-19 outbreaks continues to be felt, according to the findings of a widely watched private survey.

The Caixin purchasing managers’ index for services stood at 48.4 in October, a dip of 0.9 percentage point from September, according to data released by financial media group Caixin today. A reading below the benchmark of 50 indicates contraction and one above reflects expansion.

Yet the data is more robust than that of the National Bureau of Statistics which was released earlier this month. The official services PMI sank 1.9 percentage point to 47.9.

Epidemic prevention and control measures hit the service sector hard, Caixin said. The new orders subindex stayed in negative territory for the second month running although there was a slight improvement from September. Overseas demand also weakened in October, it added.

On the other hand, employment in the service sector expanded for the first time this year, the report said. The employment subindex rose to its highest level since June last year, indicating that business expectations are picking up, leading to capacity expansion and accelerated sales.

The Caixin PMI for manufacturing rebounded 1.1 percentage point to 49.2, marking its third straight month in contraction territory. This is in line with the official manufacturing PMI which also came in at 49.2.

However, the Caixin composite PMI, which combines the services and manufacturing sectors, dipped 0.2 percentage point to 48.3 in October, also the lowest since June.

The economic data for the third quarter shows that the economy is recovering, as several primary indicators have stabilized and were slightly better than market expectations, said Wang Zhe, senior economist at Caixin Insight Group.

However, the domestic and international political environments remain complicated, and unfavorable factors affecting economic development have increased, Wang said. In particular, the continued spread of the coronavirus is significantly restricting supply chains and dampening demand. There is still tremendous downward pressure on the economy and the foundation for economic recovery is not yet solid.

Editor: Kim Taylor