The Chinese services sector experienced a weaker growth for the second consecutive month during January, on account of lower prices and a dip in new orders received. The Caixin China General Services PMI slid to 51.8 in January from 52.5 in December, the lowest level seen in three months.

The services sector contributes to more than half of China’s GDP and has been experiencing weakness on the back of a weaker rise in new orders and a stagnation in employment. Services companies in China also grappled with higher input costs, especially for fuel and labor, even as they cut average selling prices to offset the slump.

On the positive side, services companies in China were more optimistic about business activity increasing over the next 12 months following the signing of the US-China phase one trade deal. However, the outlook and the figures do not yet take into account the effect of the recent coronavirus outbreak in China, which has resulted in a lockdown across several provinces and regions.