China’s service industries catching up as life returns to normal after coronavirus shock wave slammed economy

August’s official non-manufacturing purchasing managers’ index (PMI) jumped to 55.2 from 54.2 in July, reaching the highest level since January 2018

The rise was driven by the service sector, which climbed to 54.3 in August from 53.1 in July as cinemas and hotels have slowly returned to normal operations

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China’s box office revenues reached 1.73 billion yuan (US$252.64 million) last week, up 84.4 per cent from a year earlier despite ongoing restrictions in theatres to prevent another wave of the coronavirus. Photo: Xinhua

Published: 8:00pm, 31 Aug 2020Updated: 11:56pm, 31 Aug 2020

With a relaxation of rules for wearing masks and the loosening of social-distancing requirements, life has started to return to normal across China, allowing economic activities in the service sector to expand while offering a boost to balance the uneven recovery of the world’s second-largest economy, analysts said.

China’s official non-manufacturing purchasing managers’ index (PMI) for August jumped to 55.2 from 54.2 in July, beating expectations of an unchanged reading and reaching the highest level since January 2018, according to the data released by the National Bureau of Statistics (NBS) on Monday.

Within the non-manufacturing index, which measures sentiment among firms in the services and construction sectors, the rise was driven by the service sector, with its August reading climbing to 54.3 from 53.1 in July, while sentiment in the construction sector dropped slightly to 60.2 from 60.5 but remained strong.

Within the services PMI data, the subindices for the hotel, catering, cultural, sports and entertainment sectors were all above 57 in August, indicating strong expansion, according to senior NBS statistician Zhao Qinghe.

“The domestic pandemic situation has stabilised, meaning that the consumption demand of citizens has grown faster,” Zhao said.

He also said that the activities in the leasing and business services sectors both rebounded this month into expansionary territory for the first time since January, thanks to the overall recovery of the economy.

“It’s encouraging that the recovery is broadening out, with service sector activity now playing catch-up with industry,” said Julian Evans-Pritchard, senior China economist at Capital Economics.