China’s services sector activity growth speeds up in July, but Delta variant risks loom
- Caixin/Markit services purchasing managers’ index (PMI) rose to 54.9 in July from 50.3 in June
- China’s official services gauge had also shown a slowdown in July, though it remained well in expansion territory
Growth in China’s services sector accelerated in July, a private survey showed on Wednesday, although the spread of the Delta variant across the country threatens to undercut the recovery in the world’s second-biggest economy.
China’s services sector has been slower to recover from the coronavirus pandemic than manufacturing, but has been helped by a gradual improvement in consumption in recent months. A rise in domestic coronavirus infections, however, is threatening to hurt the economy’s steady recovery.
The July readings were buoyed by the successful containment of coronavirus cases in southern China, said Wang Zhe, senior economist at Caixin Insight Group, although he warned that the impact from the latest round of outbreaks since late July was likely to hurt August’s PMI readings.
“The economy still faces enormous downward pressure, and we need to ensure business owners remain confident,” Wang said.
A subindex of new business in the Caixin survey stood at 54.5 in July, up from 50.5 the previous month. New export orders contracted again due to the resurgence of coronavirus cases overseas.
Business confidence picked up, although it was still slightly lower than its long-term average. Service sector employment returned to growth in July but the rate of job creation was only slight as firms looked to control costs.
Caixin’s July composite PMI, which includes both manufacturing and services activity, rose to 53.1 from June’s 50.6.