(Yicai Global) April 6 -- Activity in China’s manufacturing and services sectors shrank at the fastest pace in two years last month amid outbreaks of Covid-19 in the country, according to a widely-watched private survey.

The Caixin China general composite purchasing managers’ index, which combines both manufacturing and services activity, slumped to 43.9 in March from 50.1 in February, according to data financial media group Caixin released today. A mark below 50 indicates contraction.

The Caixin manufacturing PMI was 48.1 for the month, down from 50.4 in February and the lowest since February 2020, per data released on April 1. The Caixin services PMI stood at 42, down from 50.2 in February and a two-year low, today’s data showed.

Supply and demand in the services sector greatly contracted in March due to the severe impact of the resurgence of Covid-19 and strict counter measures, the surveyed companies pointed out.

The pandemic overseas also led to a drop in demand, resulting in the new export orders sub-index falling to the lowest since November 2020. The service sector’s new orders sub-index also slumped to the lowest in almost two years in March.

Meanwhile, the rapid increase in the service sector’s costs and expenses for raw materials, food, transport, labor, and Covid prevention measures put more pressure on companies, despite the impact on consumers being limited. The input price index for services rose from a six-month low last month, exceeding its long-term average.

Although costs jumped, the producer price index for services fell to the lowest in seven months in March mainly because of the weak demand. Some companies passed on higher costs by raising prices, while others cut them to attract new business.

Editor: Futura Costaglione