China’s services activity in March accelerates at the quickest pace in 2-1/2 years on robust new orders and job creation and a consumption-led post-COVID recovery, a private-sector survey showed on Thursday.
The Caixin/S&P Global services purchasing managers’ index (PMI) rose to 57.8 in March from 55.0 in February, the third consecutive monthly expansion after the government dropped stringent anti-virus curbs late last year. It was the highest reading since November 2020.
The 50-point mark separates expansion and contraction in activity on a monthly basis.
The upbeat figure echoed an official PMI released last week, which shot to the highest level in more than a decade.
Thanks to improvements in customer demand, the rate of new orders was the sharpest since November 2020, the Caixin survey showed. Notably, new export orders in the services sector grew at the fastest pace on record.
As firms took on additional workers to satisfy the growing business demand, the rate of job creation was the fastest in 28 months.
However, business confidence across the sector dropped to a three-month low.
Rising labour and raw material costs pushed up input prices at the end of the first quarter. Firms also attached greater amounts of incoming new work and subsequent pressure on capacity with backlogs of work.
“Bookings have recovered 70-80% to pre-COVID level and are not as good as I had expected,” said a man surnamed Yang, who runs a home stay business in southeastern Xiamen, Fujian province.
“Neither the economy nor household consumption has fully recovered,” Yang added.
Some economists doubted whether the stellar economic recovery can last long amid rising geopolitical tensions and financial concerns outside China.
Julian Evans-Pritchard, head of China economics at Capital Economics, said in a note that recent data suggests the consumer recovery remained uneven in March and may have lost some momentum, citing weak car sales.
“But the general picture seems to be that while consumers have been quick to return to the streets and public transit, they have been slower to step up discretionary spending on big ticket items or long-distance travel,” Evans-Pritchard said.
Caixin/S&P’s composite PMI, which includes both manufacturing and services activity, rose to 54.5 in March from 54.2 a month prior, marking the quickest expansion since June. – Reuters
