China’s services sector remains a bright spot as factory data disappoints, shows Caixin reading


China’s services activity remained well within the growth zone in April as a private survey showed a softer reading from March.

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China’s services activity remained well within the growth zone in April, even though a private survey showed a softer reading than in March.

Caixin/S&P Global Services Purchasing Managers’ Index It fell to 56.4 in April from 57.8 in the previous month. It is still the second highest figure recorded since November 2020.

This marked the fourth consecutive month above the 50-mark that separates growth and contraction.

The latest Caixin readings show that services activity is still “undergoing a rapid recovery”, according to Wang Zhe, senior economist at Caixin Insight Group.

“There was still plenty of optimism in the services sector in April, with the reading for expectations for future activity well above the neutral 50.0 level,” Wang wrote, adding that “businesses expressed confidence in an improved market environment.” Continued to do so as the effect of Covid has subsided.”

Expansion in new orders for services also moderated slightly from the previous month, the highest in 28 months. Caixin said new business from overseas has also grown at a historically high pace, despite slowing growth since March.

The continued expansion in China’s services activity stood in stark contrast to the dismal factory activity reported earlier in the week.

Caixin China General Manufacturing Purchasing Managers’ Index fell to 49.5 in April, marking the first reading below the 50-mark in three months.

New orders fell, further evidence of a short-lived recovery in factory output in February, when readings rose to their highest level in eight months.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said of Caixin’s factory activity data, “Higher activity levels were often associated with a return to more normal operating conditions, as the impact of the pandemic continued to fade, leading to There was growing strong demand and high customer numbers.” ,

National Bureau of Statistics Manufacturing PMI The reading also missed expectations and fell into contraction territory in April with a reading of 49.2 from March’s reading of 51.9.

recovery yet to stabilize

A separate reading from Friday’s Caixin survey showed a softening in overall business activity despite a continued expansion.

The Caixin China General Composite Purchasing Managers’ Index fell from 54.5 in March to 53.6 in April, registering the slowest growth rate since January this year.

“While a massive uptick by the services sector continued, both manufacturers and service providers reported a softer growth in output compared to March,” Caixin said in its Friday release.

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Caixin’s Wang noted a difference between data for factories and services.

“It is worth noting that activity in manufacturing and services contracted significantly, with employment and input costs in the manufacturing sector falling,” Wang wrote.

“It remains to be seen whether the economic rebound is durable following the release of short-term demand, with several indicators flagging that the recovery has not yet stabilized,” they wrote.

downside risk to growth

Earlier in the week, S&P noted latest disappointments in China’s manufacturing activity data signal Potential downside risks to the economy’s second quarter growth,

“April’s services sector PMI data will be of greater importance in determining the near-term path of GDP growth given the region’s greater share of the economy and resurgent consumer spending on services,” wrote S&P.

“On a brighter note, the decline in prices recorded by the survey suggests that mainland China does not export high inflationary pressures to other economies,” he said.

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