Workers produce cars in a facility in East China's Shandong Province on December 31, 2019. Photo: cnsphotos

The Caixin China General Services Purchasing Managers Index (PMI) released on Wednesday fell 0.7 percentage points to 51.8 in January, its lowest since November 2019. Industry analysts say the fall in PMI is within expectations and the Chinese economy still has great resilience amid the coronavirus outbreak.

Hong Tao, director of the Institute of Business Economics at Beijing Technology and Business University, told the Global Times on Wednesday that the PMI is now at its lowest level in four months, but it is normal and within expectations.

"Although it will have an impact on consumption, construction, imports and exports as a whole due to the novel coronavirus outbreak, the epidemic's impact on the Chinese economy will only be short-term and partial," Hong said.

As the two major sectors - services and manufacturing - fell, the composite PMI dropped 0.7 percentage points to 51.9, a four-month low, according to Caixin. The Caixin manufacturing PMI edged down 0.4 percentage points to 51.1 in January, data showed on Monday.

Expansion in both services and manufacturing sectors slowed in January. While business confidence was boosted by improved relations between China and the US, there was no overall replenishing of inventories due to a limited improvement in demand and a less resilient economic recovery, according to a Caixin report citing Zhong Zhengsheng, director of macroeconomic analysis at consultancy CEBM Group.

Caixin PMI trends are not identical to those of the National Bureau of Statistics (NBS), which suggest the services sector has picked up markedly. The business activity index in the services sector in January rose 1.3 percentage points from December to 53.6 percent, with sentiment rising to a seven-month high, data from the NBS showed on Friday.

Edmund Yang, a PwC partner in Beijing, told the Global Times on Wednesday that these indexes, which show an increase in new export orders, indicate the signature of the China-US trade deal has removed some uncertainties clouding China's economic recovery. That is despite the Caixin services PMI drop and a slight fall in the Caixin manufacturing PMI, in contrast to the uptick of China's official data.  

Yang said the recent market injection by China's central bank is likely just a beginning, with more moves expected to boost investor confidence and stimulate domestic demand.

"With current concerns over the impact of the coronavirus outbreak, I would say that rather than focusing on the declines in Caixin indexes, our attention should instead be on the resilience of China's economy," Yang said.