China's services PMI hits three-month high

China's services activity expanded at a quicker-than-expected pace in November, with the services purchasing managers' index (PMI) reaching the highest level in three months, according to a private survey on Tuesday, further underscoring China's continued economic rebound.

The Caixin services PMI, a private gauge of the country's services sector, stood at 51.5 in November, up 1.1 points from the previous month, marking the highest level in three months, according to a Caixin report.

As the policy of stabilizing growth continues to take effect, the expansion pace of China's service sector accelerated in November, leading to a rebound in overall business sentiment, the Caixin report said.

It signaled further increases in activity and demand across China's service sector in the month. "Though modest by historical standards, upturns in both activity and overall new work were the best seen for three months amid reports of firmer market conditions," read the report.

Companies expressed stronger optimism over the year-ahead outlook. Employment fell fractionally, as some firms maintained a cautious approach to hiring.

The index has now signaled an expansion of business activity across China's service sector in each of the past 11 months, it said.

The previously released Caixin Manufacturing PMI rose by 1.2 points to 50.7 in November, returning to expansion territory. Both PMIs rebounded simultaneously, propelling the Caixin China General Composite PMI for November from 50 in October to 51.6, marking the highest point in the last three months. This reflects an improvement in the production and operational activities of Chinese enterprises, Caixin said.

"Both services supply and demand expanded, as the market continued to heal. The gauges for business activity and total new orders were above 50 for the 11th consecutive month and hit three-month highs," said Wang Zhe, senior economist at Caixin Insight Group.

"The Caixin Services PMI index in November was in expansion territory and was better than expected. It shows that the domestic service industry continues to expand, and the pace of expansion of small and medium-sized service enterprises has accelerated," Zhou Maohua, a macroeconomist at China Everbright Bank, told the Global Times on Tuesday.

Zhao said that judging from the trend, the service industry is expected to maintain its steady expansion. The main reason is that the impact of public health events has gradually weakened, the domestic economy has returned to normal, policies have offered strong support, and confidence among residents and businesses has recovered, he said.

Meanwhile, the domestic tourism market is also seeing accelerating recovery. Tourism spending between December and the Chinese New Year in February 2024 is expected to hit a new high, China Media Group said on Tuesday, citing the Ministry of Culture and Tourism (MCT) and pointing to various policy measures taken by localities across the country to boost travel and consumption.

In the first three quarters, the number of domestic tourist trips reached about 3.67 billion, up 75.5 percent year-on-year, according to the MCT. Domestic travel spending reached 3.69 trillion yuan, up 114.4 percent year-on-year, data from the ministry showed.