China's services firms wallowed in contraction in April as layoffs hit a record and export orders plunged after signs of improvement in March, a private survey showed, dashing hopes of a quick recovery from the coronavirus blow.
BEIJING - China’s services firms wallowed in contraction in April as layoffs hit a record and export orders plunged after signs of improvement in March, a private survey showed, dashing hopes of a quick recovery from the coronavirus blow.
The third straight month of contraction for China’s services sector, an important generator of jobs and which accounts for about 60% of the economy, suggests a still turbulent period ahead after the collapse in economic activity in the first quarter, when gross domestic product shrank 6.8%. Major economies, including the United States and Europe, remain in the grip of the pandemic amid rapidly rising infections and deaths. The sweeping impact of the coronavirus, with the global death toll at well over 250,000, has many worried that a worldwide recession could be far more damaging than first thought.
Dwindling exports pushed overall new business lower, and backlogs of work declined again as orders dried up, suggesting the recovery in domestic consumption has been insufficient to offset the significant downdraft in external demand. Some analysts expect Beijing to roll out a comprehensive stimulus package akin to the one launched soon after the global financial crisis, which pulled China out of the slump more quickly than elsewhere in the world albeit at the cost of mounting debt. But others caution China’s higher leverage will limit the scope of any such measures.
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