China Services Activity Grows at Slowest Pace in Five Months, Caixin PMI Shows
Xu Wei
DATE:  Jul 05 2023
/ SOURCE:  Yicai
China Services Activity Grows at Slowest Pace in Five Months, Caixin PMI Shows China Services Activity Grows at Slowest Pace in Five Months, Caixin PMI Shows

(Yicai Global) July 5 -- Activity in China’s services sector expanded for the sixth consecutive month in June, but at the slowest pace since January, according to the results of a widely watched private survey.

The Caixin services purchasing managers’ index came in at 53.9 last month, down from 57.1 in May to mark the lowest reading since January’s 52.9, data released today by financial media group Caixin showed. A reading above 50 indicates expansion.

The Caixin manufacturing PMI eased back to 50.5 in June from May’s 11-month high of 50.9, remaining in growth territory for a second straight month, while the Caixin comprehensive PMI, which includes both services and manufacturing activity, slid to 52.5, also the lowest since January, from 55.6 the month before.

The foundations of the economic recovery are not yet stable, as prominent issues remain, including a lack of internal growth drivers, weak demand, and poor market expectations, said Dr. Wang Zhe, senior economist at Caixin Insight Group.

June’s official manufacturing and non-manufacturing PMIs published by the National Bureau of Statistics at the end of last month also dipped, falling 0.2 percentage point and 1 percentage point to 49 and 52.8, respectively. The official comprehensive PMI dropped 0.6 point to 52.3.

The official gauges are compiled by the government and survey 3,200 firms, most state-owned, whereas the Caixin PMIs track 650 businesses that are generally smaller and privately owned.

The services sector’s sub-indexes for business activity and new orders remained above 50 for the sixth consecutive month, but slipped to their second-lowest and lowest this year. Overseas demand was stable, as the export orders sub-index expanded for the sixth month in a row.

Companies generally believe that the services sector has benefited from the recovery of tourism and transportation after China eased its Covid-19 controls at the beginning of the year.

The services employment sub-index continued to expand for the fifth straight month, but growth was limited. More people were employed last month, but the workload continued to increase as new orders also rose.

The services sub-index for business operation expectations rose for the first time in five months. Companies predicted that the economy will improve and boost sales and business growth in the services sector.

Policies should boost macroeconomic support and raise microeconomic efficiency to be sure they benefit market players and improve employment and expectations, Wang noted.

Editor: Futura Costaglione

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Keywords:   PMI,Service,Caixin