China’s services sector shows strong first growth since start of coronavirus outbreak as controls eased
- The Caixin/Markit services purchasing managers’ index (PMI) rose to 55.0 in May from 44.4 in April, hitting the highest level since late 2010
- The return to expansion for China’s services sector was driven by a sharp rise in new domestic business as the economy recovers from virus containment measures
China’s services sector bounced back strongly in May, posting the first growth since the beginning of the coronavirus outbreak earlier this year, as strict controls aimed at containing the pandemic were eased, a private survey showed on Wednesday.
The latest reading was the highest since October 2010.
The rebound into growth for China’s services sector, an important generator of jobs that accounted for about 60 per cent of the economy last year, was driven by a sharp rise in domestic new business to the highest level in nearly 10 years.
Services accelerated their recovery as the lockdown measures were relaxed. The contraction in manufacturing also narrowed, driven by domestic demand
Foreign demand, however, remained subdued as the pandemic hit China’s export markets hard, with the subindex for export orders falling for the fourth month in a row.
Employment in the sector also continued to contract, albeit at a slower pace.
“Services accelerated their recovery as the lockdown measures were relaxed. The contraction in manufacturing also narrowed, driven by domestic demand,” said Dan Wang, an analyst at the Economist Intelligence Unit.
“Since foreign orders remain weak, the increase in manufacturing production may result in overcapacity later in the year.