China’s services activity expands at quickest pace in 15 months in July
- Caixin/Markit services purchasing managers’ index (PMI) rose to 55.5 in July from 54.5 in June
- Last week, the official non-manufacturing PMI fell to 53.8 from 54.7 in June
China’s services activity grew at the fastest rate in 15 months in July as easing coronavirus curbs boosted consumer confidence, but foreign demand fell and companies cut staff for the seventh month in a row, a private-sector survey showed on Wednesday.
The 50-point mark separates growth from contraction on a monthly basis.
A subindex for new business soared to nine-month high, thanks to improved domestic demand, but new export business contracted for the seventh successive month, the Caixin survey showed.
Meanwhile, the rate of cost inflation in the services sector picked up for the first time since March as prices for food, fuel, raw materials and staff remained high.
But some market watchers are not sure how long the virus reopening boost will last.
“Beware the July rebound narrative. Markets are convinced that easing lockdowns mean the worst is over, but July data show that firms are still largely refusing to invest, borrow and especially now, hire,” said Leland Miller, chief executive at data firm China Beige Book.
“This is likely because companies simply do not believe that their Covid zero nightmare is over.”
Caixin’s July composite PMI, which includes both manufacturing and services activity, fell to 54 from 55.3 the month prior.
The Caixin PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in China.
Analysts polled by Reuters have forecast growth to slow to 4 per cent this year.