People shop in a mall in Shanghai on Saturday as the city gears up to promote consumption. It plans to hold a shopping festival on May 5 amid the COVID-19 pandemic. There will be big discounts online and at physical stores. Alibaba said discounts it offers will help Shanghai consumers save about 2 billion yuan ($282 million) during the festival. Photo: IC

The Caixin services Purchasing Managers Index (PMI), a gauge of China's services sector activity, rebounded slightly in April from March, though it was still stuck in contraction territory as export orders remained sluggish and domestic industries struggled to return to normal. 

However, some Chinese economists remain upbeat, saying the economic rebound will continue and could appear more evident from May. 

The Caixin services PMI stood at 44.4 in April, up from 43 in March but below market expectations. The reading was well below the 50 mark that separates expansion from contraction.

The figure reflected a continued decrease in demand in the services sector, particularly from abroad. In April, new export orders in the services industries fell to the second-lowest level since September 2014 as businesses were closed and other restrictions were persisted due to the coronavirus pandemic, according to Caixin.

Zhong Zhengsheng, director of macroeconomic analysis at consultancy CEBM Group, said that China's economy sustained a serious blow from declining exports in April, which will have knock-on effects on personal incomes, consumption and investment. 

Zhong also noted that positive stimuli, such as increased infrastructure investment, are still not enough to offset the sharp decrease in overseas demand, and the domestic economy is still mired in an ongoing slowdown. 

There has also been a delayed rebound in local consumption, as the impact of the pandemic in areas such as employment has dented many consumers' willingness and ability to spend, said Cong Yi, a professor at the Tianjin University of Finance and Economics.

According to Caixin's data, services industry employment dived to a historic low in April, while the manufacturing employment index dropped as many industries cut staff to cope with business difficulties. 

"What the figures reveal is that the impact of the epidemic has lasted longer than expected, and the economic recovery is proving more difficult as well," Cong told the Global Times. According to Cong, the weak services sector will pose problems for China's general economy, as the sector contributes more than half of the country's GDP. 

Caixin's earlier data also showed that the manufacturing sector continues to struggle. The Caixin manufacturing PMI was 49.4 in April, down from 50.1 in March. 

However, experts are still positive about the prospects of China's economic recovery, given that China is pushing the resumption of production.

"Consumption is curtailed in many aspects, as production hasn't fully been restored, but the situation will improve. For example, once schools and tourism sites fully restart, the surrounding shops and restaurants will recover," Cong said. 

Liu Xuezhi, an economist at the Bank of Communications, noted that the subdued services industry is "normal", considering foreign demand is hampered by the pandemic and a recovery will take some time to materialize.