(Yicai Global) Dec. 5 -- Activity in China’s service sector slumped to the lowest level in the past six months last month as the country's Covid-19 restrictions take their toll, and especially on non-manufacturing fields.

Caixin's purchasing managers’ index for services slipped to 46.7, down from 48.4 in October, while remaining in the non-growth territory of under 50 for the third straight month, according to data released by the financial media group today.

The tertiary industry has been bearing the brunt of China's Covid-19 restrictions, even more than manufacturing. The PMI for the manufacturing sector climbed to 49.4 in November from 49.2. Still, the Caixin composite PMI, which combines services and manufacturing, dropped to 47 from 48.3, also the lowest since June.

The latest Caixin gauges, which focus on small and mid-sized companies, show similar tendencies as the November PMIs published by the National Bureau of Statistics whose data cover mainly large firms. The official services PMI declined to 45.1, down by 1.9 percentage points, the NBS revealed earlier. The composite PMI fell to 47.1, down from 49.

Caixin's sub-indexes show how production and demand in services dived the most in November since the previous peak of the pandemic in the first quarter of this year. However, new export orders surged, moving into expansion territory for the second time this year.

Companies, polled by the above-mentioned news outlet, said that exports recovered because the market situation improved and traveling abroad got easier. But the weakening global economy is still constantly curbing business growth.

Expectations were lowered as the business activity prediction index dropped to the weakest in eight months. Firms anticipated their operations and outputs to return to normal once new outbreaks are brought under control but China's epidemic control policies still cause uncertainties.

Hiring was soft as the employment sub-index shrank to the lowest level since November 2005, the first point of data collection, as mobility was restricted in some domestic regions due to the pandemic and companies' declining operational demand.

The employment index has remained low for long due to the poor trio of demand, supply, and expectations, said Wang Zhe, senior economist at Caixin’s think tank.

The market is in urgent need of policies that spur employment and stabilize domestic demand, Wang said. Policymakers should strengthen coordination and collaboration between fiscal and monetary policies, focus on expanding domestic demand, and also increase salaries within low-income groups, he added.

Editor: Emmi Laine, Xiao Yi