China’s services sector recovery accelerates, boosted by employment and surging business optimism
- The Caixin/Markit services purchasing managers’ index (PMI) rose to 54.3, the highest since December, from 51.5 in February
- The findings were largely in line with an official survey released last week, which showed China’s non-manufacturing purchasing managers’ index (PMI) rose to 56.3 in March from 51.4 in February
A recovery in China’s services sector picked up speed in March as firms hired more workers and business optimism surged, although inflationary pressures remained, a private sector survey showed on Tuesday.
Firms reported the sharpest increases in activity and overall sales in three months. New export business continued to contract but at a slower pace.
A subindex for employment rose back into positive territory as businesses hired more workers than they laid off, the survey showed.
Chinese authorities successfully curbed domestic transmissions of coronavirus over the winter, leading to quarantine restrictions and testing requirements being scaled back.
“The Covid-19 flare-ups that occurred in the fall and the winter have basically died down, and the services sector has quickly recovered with supply and demand expanding,” said Wang Zhe, senior economist at Caixin Insight Group.
Costs for services firms continued to grow, according to the survey, although at a slower pace than the month before. Companies raised their prices charged for the eighth month in a row and by the largest amount so far this year.
Chinese services firms were highly optimistic about the year ahead, with business expectations rising to the highest level since 2011.
The services sector, more vulnerable to social distancing restrictions, had been slower to recover initially from the pandemic than the industrial sector.
Domestic coronavirus cases have largely been controlled in China, although a city on the border with Myanmar last week ordered home quarantines and mass testing after new cases emerged.
Analysts expect a strong rebound in China’s full-year growth.
Meanwhile, Caixin’s composite manufacturing and services PMI rose to 53.1 in March, from 51.7 the previous month.