China’s Caixin services PMI for February came in at a record low of 26.5 vs. 52.6 expected and 51.8 last, which evidently showed that the coronavirus outbreak led to a record drop in business activity.
The more than 25 points fall in the index marked a sharp decline in business activity that was also the first recorded since the survey began over 14 years ago.
Meanwhile, the Composite Output Index dropped sharply to 27.5 in February from 51.9 booked in the previous month.
Quotes from Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group
“The Caixin China General Services Business Activity Index fell to 26.5 in February, about half the reading of the previous month, marking its first drop into the contractionary territory since the survey launched in November 2005. Stagnating consumption amid the coronavirus epidemic has had a great impact on the service sector.”
“The coronavirus epidemic has obviously impacted China’s economy. It is necessary to pay attention to the divergence of business sentiment between the manufacturing and the service sectors. While recent supportive policies for manufacturing, small businesses and industries heavily affected by the epidemic have had a more obvious effect on the manufacturing sector, it is more difficult for service companies to make up their cash flow losses.”
AUD/USD trims gains
The awful Chinese Services PMI numbers weighed on the Aussie dollar, as AUD/USD trims upbeat Australian Q4 GDP led gains to now trade around 0.6590, up 0.15% on the day.