China’s services activity expands at fastest in almost a year in June
- Caixin/Markit services purchasing managers’ index (PMI) rose to 54.5 in June from 41.1 in May
- Last week, the official non-manufacturing PMI rose to 54.7 from 47.8 in May
China’s services activity snapped three months of decline in June and grew at the fastest rate in almost a year as easing coronavirus curbs revived demand, although firms remained cautious about hiring, a private-sector survey showed on Tuesday.
The 50-point mark separates growth from contraction on a monthly basis.
While activity has sped up since various coronavirus lockdowns were rolled back, headwinds facing the world’s second-largest economy persist, including a still subdued property market, soft consumer spending and fear of any recurring waves of infections.
Cases have risen in the past few days. Daily infections in mainland China increased to more than 300 over the weekend compared with a few dozens in late June.
On Monday, 11 cities were in full or partial lockdowns or had implemented district-based controls, compared with five cities in the previous week, according to Nomura.
The Caixin survey on Tuesday showed a subindex for new business jumped to 52.4 – the highest this year – from 44.8 in the previous month while the drop in export orders also softened. Price pressures also eased, with input prices largely unchanged from the previous month.
However, employment continued to decline in June for the sixth straight month, with services firms linking it to cost-cutting initiatives and resignations amid the coronavirus.
Overall, regional Covid outbreaks were put under control and restrictions were loosened in June, facilitating a gradual recovery in business operations
“Overall, regional Covid outbreaks were put under control and restrictions were loosened in June, facilitating a gradual recovery in business operations,” said Wang Zhe, senior economist at Caixin Insight Group.
“Deteriorating household income and expectations caused by a weak labour market dampened the demand recovery. Correspondingly, supportive policies should target employees, gig workers and low-income groups impacted by the outbreaks.”
Caixin’s June composite PMI, which includes both manufacturing and services activity, rose to 55.3 from 42.2 the previous month.
The Caixin PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in China.
