China’s services activity picks up strongly as demand picks up – Caixin PMI

By: News Team

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China's services activity picks up strongly as demand picks up - Caixin PMI

Activity in China’s services sector expanded at the fastest pace in six months in February as the removal of tough COVID-19 restrictions revived customer demand, driving a solid rise in employment, a private-sector survey showed on Friday.

Caixin/S&P Global’s services purchasing managers’ index (PMI) rose from 52.9 in January to 55.0 in February, marking a second consecutive monthly increase in activity after the government abruptly dismantled anti-virus measures in December.

The 50-point mark separates expansion and contraction of activity on a monthly basis.

The reading coincides with the official services PMI released on Wednesday, suggesting that a solid recovery in the sector is underway.

Service companies reported the strongest increase in new business since April 2021, while growth in new export orders accelerated to the highest in nearly four years, the Caixin survey showed.

Improving market conditions also drove a strong increase in employment. Companies began hiring additional workers for the first time in four months and the job creation rate was the highest since November 2020 as expenses and travel increased.

China’s human resources minister Wang Xiaoping said Thursday that the country’s labor market was better than expected in January and February.

Commerce Minister Wang Wentao also said Thursday that the country’s consumption has recovered significantly this year, with important commercial areas and the catering sector increasing markedly.

Thanks to the COVID reopening, business confidence in China’s services sector remained solid last month, although the degree of optimism eased slightly after touching the highest levels in nearly 12 years in January.

“The economy has entered a post-COVID recovery, and service activity shows signs of a stronger recovery than the manufacturing sector,” said Wang Zhe, economist at Caixin Insight Group. “But the impact of the pandemic remains far-reaching.”

“In the short term, relevant policies should focus more on raising household incomes and improving market expectations.”

The Caixin/S&P composite PMI, which includes both manufacturing and services activity, rose from 51.1 the previous month to 54.2 in February, the fastest expansion since June.

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