China’s Services Sector Growth Slows Slightly, Caixin/S&P Global PMI Shows
According to the latest Caixin/S&P Global services purchasing managers’ index (PMI), China’s services sector expansion eased slightly to 52.5 in April from 52.7 in March. Despite the slight slowdown, the sector remained in expansionary territory for the 16th consecutive month.
The survey revealed that while costs were rising, growth in new orders accelerated, and business sentiment improved significantly. This data is seen as a positive sign for the country’s economic recovery, following faster-than-expected growth in the first quarter.
Wang Zhe, Senior Economist at Caixin Insight Group, noted that the strong start to the year aligns with the continued expansion of both the manufacturing and services sectors. New business reached its highest level since May of last year, driven by increased overseas demand and growth in tourism activity.
However, Chinese service providers are still facing cost pressures, particularly from rising input prices for materials, labor, and energy. Despite this, firms have been able to increase prices charged to customers, indicating some level of pricing power.
Looking ahead, economists emphasize the need for consistent policy implementation to maintain the current economic recovery momentum. While the Caixin survey focuses more on smaller, export-led firms, it complements the broader official PMI data, which showed a slowdown in services sector activity last month.
Overall, the composite PMI, which tracks both services and manufacturing sectors, rose to 52.8 in April, marking the fastest pace since May 2023. Despite pockets of strength in the first quarter GDP report, economists believe a robust economic revival in China is still some way off and will require structural reforms and stimulus measures.