Caixin services PMI hits 54 in May

2024-06-05 14:38:55Global Times Editor : Li Yan ECNS App Download

The Caixin China General Services Purchasing Managers' Index (PMI) came in at 54 in May, expanding for the 17th consecutive month, according to data released by Caixin on Wednesday. 

Chinese analysts said that the figure showcased a swift acceleration in China's services activity.

The index in May was higher than April's reading of 52.5, remaining in the expansion territory and reaching its highest level since August 2023.

Driven by an accelerated expansion in supply and demand, particularly strong market demand, the services sector gained momentum in May.

The new orders index rose for four consecutive months, and the new export orders index rose for the fourth month in a row, indicating accelerating overseas demand.

"The service sector is now one of the main drivers of the national economic growth. With policy mix to stimulate market demand, the growth momentum is strong as previously expected," Li Chang'an, a professor at the Academy of China Open Economy Studies of the University of International Business and Economics, told the Global Times on Wednesday.

Different from April, boosted by faster supply and demand expansion, the services sector saw improved enrolments, with the employment index hitting its highest point since October 2023, ending a three-month decline.

Companies reported they were hiring more workers to manage rising workload. Heightened supply-side activity helped clear some backlog orders.

Notably, the prices rose modestly. Both input costs and service charges increased, though the increases were limited. Due to previously low-price levels, these figures reached their highest since June 2023 and January 2022 respectively. The rise in input costs was driven by higher prices for raw materials, salaries, and transportation fees.

"While service sector companies remain optimistic about the future, they have concerns about the global economic environment and rising raw material prices. The business expectations index for the service sector in May was in expansion territory, though below the long-term average," Wang Zhe, a senior economist at Caixin Insight Group, said on Monday.

"We should remain optimistic. A slight rise in prices which can stimulate market vitality is not a bad thing at China's current stage. It may even be a sign of economic recovery," Li said.

In the coming months, the services sector's economic development will continue its recovery trend and steadily improve, according to Li.

The Caixin China Manufacturing PMI for May increased by 0.3 percentage points to reach 51.7, the highest since July 2022. Boosted by improvements in both manufacturing and services, the composite PMI for the month rose by 1.3 percentage points to 54.1.

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