China’s services activity picks up in May as new orders shore up consumption-led economic recovery
- Caixin/S&P Global services purchasing managers’ index (PMI) rose to 57.1 in May from 56.4 in April
- Last week, the official non-manufacturing gauge, which measures business sentiment in the services and construction sectors, fell to 54.5 in May from 56.4 in April
China’s services activity picked up in May, a private-sector survey showed on Monday, as a rise in new orders shored up a consumption-led economic recovery in the second quarter.
After a sharp but unbalanced rebound in the first quarter of 2023, China’s consumption recovery is entering the second stage, which will be more endogenous and powered by broader job gains
“After a sharp but unbalanced rebound in the first quarter of 2023, China’s consumption recovery is entering the second stage, which will be more endogenous and powered by broader job gains,” Morgan Stanley analysts said on Sunday.
Bruce Pang, chief economist at Jones Lang LaSalle, said the different survey sizes might explain the discrepancy between the Caixin and official PMI readings. The Caixin PMI surveys around 650 private and state-owned services companies, while the official PMI surveys 4,300 companies.
Some economists warn the pent-up demand for in-person services may fade due to slowing income growth and mounting unemployment pressures, raising headaches for policymakers already struggling with weak foreign demand and an uneven post-coronavirus recovery.
The Caixin survey showed service companies reported a rise in new business last month when the first May Day holiday following China’s reopening boosted orders for hotels, restaurants and travel agencies.