(Yicai Global) June 5 — China’s service sector activity fell by 5% as post-COVID-19 consumption continues to drive the country’s economic recovery, according to a widely watched private survey. It expanded to the highest level in two and a half years in May.
According to data released today by financial media group Caixin, the Caixin service purchasing manager’s index in May was 57.1, up from 56.4 in April, and the increase for the fifth consecutive month. Values above 50 indicate expansion.
Caixin China Composite PMI climbed to 55.6 last month from 53.6 in April, hitting a new high since 2021, led by services and manufacturing, signaling faster production and business expansion rice field. Caixin Manufacturing PMI In May Was 50.9, Returning To The Expansion Area For The First Time In Two Months.
The official manufacturing PMI and services PMI for May announced by the National Bureau of Statistics fell by 0.4 percentage points and 1.3 percentage points to 48.8 and 53.8, respectively.
The official index, compiled by the government, consists of 3,000 companies, mostly state-owned, while the Caixin PMI generally tracks 500 smaller, privately owned companies.
Dr. Wang Zhe, senior economist at Caixin Insight Group, said the strength of the service sector relative to manufacturing remains a distinguishing feature of the Chinese economy, but employment and market expectations weakened last month.
Deteriorating employment conditions, declining price levels and waning optimism in the manufacturing sector “suggest that economic growth lacks internal impetus and market actors are not sufficiently confident. This further highlights the importance of expanding and recovering demand,” Wang said.
The service sector business activity and new orders sub-index recovered slightly in May, reaching its second highest level since December 2020. After China eased its anti-coronavirus measures, hitherto restrained demand was released and business conditions gradually returned to normal. According to surveyed companies. However, export orders fell to their lowest this year.
The service employment sub-index fell, but remained above 50. As the market recovers, companies need to ramp up production capacity and fill vacancies, survey participants said. The input price sub-index remained above 50 as rising labor and raw material costs accelerated the rise in production costs.
The service business operating expectations sub-index fell for the fourth month in a row, hitting its lowest point this year but above last year’s average. Respondents said growth expectations were still underpinned by a strong post-coronavirus recovery, rising customer demand and corporate expansion plans.
Editor: Martin Kadiev