China’s services sector expanded at its quickest pace in over a decade in June
- The Caixin/Markit services purchasing managers’ index (PMI), which focuses on smaller, private firms, jumped to 58.4 in June from 55.0 in May
- The rate of expansion in June was the quickest recorded since April 2010, while new orders rose at the fastest pace since August 2010
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China’s services sector improved at its quickest pace in over a decade in June amid an easing of coronavirus-related restrictions and stronger demand, a private survey showed on Friday.
The rate of overall expansion in June was the quickest recorded since April 2010.
Total new orders rose at the quickest pace since August 2010 as businesses continued to resume normal operations, and new export work expanded for the first time since January.
Business confidence hit a three-year high in June amid forecasts of further increases in customer demand.
Employment, though, fell for the fifth straight month with the modest drop attributed to staff leaving voluntarily.
The composite output index within the Caixin/Markit services PMI rose to 55.7 in June from 54.5 in May, signalling a sharp and accelerated increase in overall business activity.
Businesses were highly confident about the economic outlook. The gauge for business expectations rose further into expansionary territory for the fourth consecutive month, suggesting that service providers remained highly optimistic about their business outlook over the next 12 months
“The Caixin China general services business activity index rose further into expansionary territory to 58.4 in June, pointing to an accelerating recovery of the services sector as the Covid-19 epidemic eased in China,” said Dr Wang Zhe, senior economist at Caixin Insight Group.
“Both supply and domestic and overseas demand recovered. Despite flare-ups in some places, the epidemic remained largely under control in China. Work resumption in the services sector accelerated. The business activity index hit a 10-year high, and the gauge for total new business also reached its highest level since August 2010, indicating a good recovery of services activities. Despite uncertainties over the pandemic overseas, the measure for new export business returned to expansionary territory, meaning that external demand has not been a drag for the first time in five months.
“Businesses were highly confident about the economic outlook. The gauge for business expectations rose further into expansionary territory for the fourth consecutive month, suggesting that service providers remained highly optimistic about their business outlook over the next 12 months, as the epidemic was under control, restrictions were lifted, and the economy recovered at a faster pace.”
Also this week, the official manufacturing PMI for June stood at 50.9. This was better than analysts’ expectations, with the median result of a Bloomberg survey predicting 50.5. It was slightly better than May’s reading of 50.6.
The Caixin/Markit manufacturing PMI also rose to 51.2 last month from 50.8 in May, beating analysts expectations and showing production at smaller Chinese factories was improving.
