Caixin PMI reveals slight easing in China’s services activity in April, remains strong

China’s services sector showed signs of a slight slowdown in expansion, but with a boost in new orders and business sentiment, hopes for a sustained economic recovery remain high, according to a private sector survey released on Monday.

The Caixin/S&P Global services purchasing managers’ index (PMI) dipped to 52.5 from 52.7 in March, marking the 16th consecutive month of expansion. Despite the slight decrease, the index remains above the 50-mark that separates expansion from contraction.

Economist Wang Zhe noted that the strong start to the year aligns with the continued expansion seen in both manufacturing and services PMIs. New business reached its highest level since May last year, driven by increased overseas demand and growth in tourism activity, leading to the fastest pace of new export orders in ten months.

While companies faced some cost pressures, including rising input prices for materials, labor, and energy, they were able to increase prices charged to customers. However, firms remained hesitant to fill vacancies left by departing employees.

The composite PMI, which tracks both the services and manufacturing sectors, rose to 52.8 last month, the fastest pace since May 2023. Despite the challenges faced by China’s economy, including a prolonged property sector crisis, there are hopes for a steady recovery throughout the year.

Economists emphasize the need for structural reforms and stimulus measures to support a stronger and sustainable economic revival. Overall, the survey results point to positive momentum in China’s services sector, providing optimism for the country’s economic outlook.