China’s services sector sentiment surged in November, jumps to second-highest level since April 2010
- Caixin/Markit services purchasing managers’ index (PMI), a gauge of sentiment among smaller, private firms, rose to 57.8 in November from 56.8 in October
- On Monday, the official non-manufacturing PMI rose to 56.4 last month from 56.2 in October – the highest reading since June 2012
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Activity in China’s services sector surged in November as the economy continued its strong recovery from the coronavirus outbreak earlier this year, a private survey showed on Thursday.
November’s reading was also above the median prediction by analysts in a survey by Bloomberg for a slight decline to 56.2 expected.
A reading above 50.0 indicates growth, while a reading below represents a contraction.
“The post-epidemic services recovery continued to pick up speed in November, as the Caixin China General Services Business Activity Index hit 57.8, up from 56.8 the previous month and reaching the second-highest level since April 2010, below only June‘s 58.4 reading,” said Wang Zhe, senior economist at Caixin Insight Group.
The Caixin/Markit composite PMI, which combines sentiment readings for the manufacturing and services sector, rose to 57.5 in November from 55.7 in October.
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What is the purchasing managers' index (PMI)?
Within the Caixin/Markit services PMI, total new business expanded at the quickest rate since April 2010, while business confidence improved to the highest for over nine-and-a-half years.
Rising activity and sales underpinned the fastest increase in employment for just over a decade, however, operating expenses rose at a sharp and accelerated rate, which led to a quicker increase in prices charged.
The upturn in sales was the quickest since April 2010, while new export business rose for the first time since June, and at the sharpest rate since April 2019.
Companies increased their staffing levels for the fourth month in a row, with the rate of job creation the most marked since October 2010.
Services supply and demand both expanded at a faster clip despite scattered Covid-19 cases found in some areas
Looking forward, business confidence regarding the year ahead strengthened for the third month running in November, with the overall degree of positive sentiment the highest since April 2011 due to expectations that the global economic conditions will recover from the pandemic over the next year. Firmer domestic demand and new product launches are also expected to boost activity levels.
“Services supply and demand both expanded at a faster clip despite scattered Covid-19 cases found in some areas. The business activity index and total new business both expanded for the seventh month in a row, hitting the second-highest and the highest level since April 2010, respectively,” added Wang.
“Overseas demand was strong, with the gauge for new export business returning to expansionary territory. Uncertainties caused by the pandemic did not slow growth in demand for services exports.
“Employment improved sharply in November as strong growth in supply and demand had a positive influence on the job market. The employment gauge stayed in positive territory for the fourth straight month, reaching the highest point since October 2010.”
