China’s service sector gathers pace in May amid gloom over slowing economy
Survey suggests level of new business in the sector rose at fastest pace in three years
Activity in China’s services sector accelerated in May as new business rose at the fastest pace in three years, a private survey showed on Wednesday, a rare piece of good news for policymakers struggling to reviving a cooling economy.
Still, economists remain cautious on China’s overall economic outlook, as credit growth remains weak and manufacturing stagnates, reinforcing views that the authorities will have to roll out more stimulus to avert a sharper slowdown.
The headline HSBC/Markit Purchasing Managers’ Index for May was 53.5, up from 52.9 in April and well above the 50-point level that separates expansion from contraction. The May figure represented the fourth straight month of acceleration.
The new business sub-component was at 54.4, up from 52.8 in April and the highest reading since 54.7 in May 2012.
Employment at services firms grew at the fastest rate since January 2013, the survey showed, another encouraging sign for policymakers as layoffs continue in the manufacturing sector, China’s traditional jobs engine.
“Overall, growth momentum appears relatively weak, weighed down by an ongoing deterioration in manufacturing operating conditions,” said Annabel Fiddes, an economist at Markit.