2021.08.3105:52:00UTC+00China Service Sector Shrinks In August

China's service sector contracted in August amid the renewed virus flare-up, official survey results from the National Bureau of Statistics showed on Tuesday.

The official non-manufacturing Purchasing Managers' Index, which measures the performance of the services and construction sectors, declined to 47.5 in August from 53.3 a month ago. A reading below 50 indicates contraction in the sector.

At the same time, the factory PMI came in at 50.1, down from 50.4 in the previous month. The expected reading was 50.2.

The composite output index fell to around 48.8 in August from 52.4 in July. "We don't think the latest drop in the PMIs should be entirely shrugged off as a temporary hit from the Delta wave," Julian Evans-Pritchard and Sheana Yue, economists at Capital Economics, said.

The upshot is that, even looking through the volatility caused by China's recent virus flare-up, the economy looks to be coming back to earth following a period of above-trend output, the economists added.