China’s services sector growth showed a slight slowdown in April, 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, but still remained in expansionary territory for the 16th consecutive month.
Despite the slight moderation in growth, the survey revealed positive signs for the Chinese economy. New orders increased at a faster pace, business sentiment improved significantly, and overall new business reached its highest level since May of the previous year. Additionally, growth in new export orders surged to its fastest pace in ten months, driven by better overseas demand and increased tourism activity.
However, Chinese service providers continued to face cost pressures, particularly from rising input prices for materials, labor, and energy. As a result, companies raised prices for their customers but remained cautious about filling vacancies left by departing employees.
Looking ahead, economists emphasize the importance of implementing policies effectively and promptly to maintain the current economic recovery momentum and boost overall market expectations. While the Caixin survey focuses more on smaller, export-oriented firms, the broader official PMI showed a sharp slowdown in the services sector activity for the previous month.
Overall, China’s economy is still grappling with challenges stemming from the prolonged property sector crisis and the lingering effects of the COVID-19 pandemic. To achieve a robust and sustainable recovery, structural reforms must be accompanied by targeted stimulus measures, according to investors and analysts.