Image: Reuters Berita 24 English - A private-sector poll on Tuesday revealed that China's services activity ended three months of loss i...
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| Image: Reuters |
Berita 24 English - A private-sector poll on Tuesday revealed that China's services activity ended three months of loss in June and expanded at the strongest rate in over a year as easing COVID regulations rekindled demand. However, businesses remained cautious about hiring.
The Caixin services purchasing managers' index (PM) rose to 54.5 in June, indicating the fastest growth since July last year and the first expansion since February. Comparatively, that to 41.4 in May.
On a monthly basis, the 50-point threshold divides expansion from contraction.
Although things have picked up after a number of COVID lockdowns were lifted, the second-largest economy in the world still faces challenges like a still-weak real estate market, weak consumer spending, and worry about future infection waves.
An official poll released on Thursday also revealed that the services sector experienced its fastest recovery in 13 months, with industries that were particularly badly hit by COVID limitations, such retail and road transport, regaining their pre-depressed levels of demand.
According to the Caixin survey, a sub-index for new business increased from 44.8 the previous month to 52.4 this year, which is the highest level of the year. The decline in export orders also slowed down. With input prices basically constant from the previous month, pricing pressures also decreased.
However, employment decreased for the sixth consecutive month in June, according to services companies, who attribute it to cost-cutting measures and resignations due to COVID.
According to Wang Zhe, Senior Economist of Caixin Insight Group, "overall, regional COVID outbreaks were brought under control and limitations were lifted in June, permitting a gradual recovery in commercial operations."
"The demand rebound was slowed down by declining household income and expectations brought on by a depressed labour market. Supportive policies should thus be directed on affected low-income groups, gig workers, and employees."
Analysts anticipate that the economy will continue to recover in the third quarter, however it will be challenging to meet this year's official GDP target of roughly 5.5 percent unless the government abandons its zero-COVID policy.
Caixin's composite PMI for June, which measures both manufacturing and services activity, increased from 42.2 to 55.3.
S&P Global compiles the Caixin PMI based on replies to surveys issued to Chinese purchasing managers.
