China services expansion picks up in fresh sign of momentum

BEIJING - China’s services sector expanded at its fastest pace since May, a private survey showed, pointing to resilience that may alleviate concerns over the economy’s outlook after weak official figures.

China’s Caixin services purchasing managers’ index (PMI) rose to 52.1 in July, according to a statement released jointly by Caixin and S&P Global on Aug 5. That beats a median forecast of 51.5 in a Bloomberg survey of economists and 51.2 in the previous month. Any reading above 50 suggests an expansion.

“Amid continued market improvement, business activity and total new orders both grew for the 19th month in a row, increasing at a faster pace than the previous month,” senior economist Wang Zhe at Caixin Insight Group said in a statement.

An employment indicator rose to the highest reading since August 2023 as services providers hired more to respond to growing market demand, the Caixin survey showed.

The private survey’s result compares with official data published last week showing services activity was on the brink of contraction for the first time since December, signalling a poor start to the third quarter. The Caixin survey focuses on smaller firms compared with the official services PMI.

China’s economy has performed unevenly in 2024, with manufacturing at times a bright spot while consumption has been weighed down by a prolonged real estate crisis. Official data showed China’s factory activity contracted for a third straight month in July, leaving the economy on a weak trajectory that is frustrating Beijing’s efforts to sustain faster growth.

The Caixin manufacturing PMI fell into contraction territory for the first time in nine months in July, a sign the country’s export machine might be cooling. BLOOMBERG