Customers eat inside a giant concrete pipe built on two layers on top of a barbecue restaurant in Southwest China's Chongqing Municipality on February 7, 2023. Photo: IC

China's services activity continues to maintain a rapid rebound in February, with the index for services activity hitting a new high since September 2022, as the country's economic recovery accelerates, boosting the domestic consumption, according to a private survey on Friday.

The Caixin services purchasing managers' index (PMI) rose to 55 in February, up 2.1 percentage points from the previous month and a new high since September 2022. The index maintained above the 50-point mark indicating expansion in activity for two consecutive months.

Caixin Senior Economist Wang Zhe said that production, demand and employment all expanded in February with the services sector seeking stronger recovery momentum, demonstrating that the country's economy began to enter the post-epidemic recovery period.

According to the survey, benefiting from the optimization of the COVID-19 response, the services business activity index and the new orders index rose by more than 2 percentage points each pushing further into expansion territory.

Foreign demand was also boosted, with the new export orders index recording its highest value since May 2019. Companies surveyed said that the optimization of epidemic prevention measures reduced disruptions to business activities, helping to boost business and demand.

The improvement of market conditions and increasing of new orders prompted enterprises to increase employment for the first time in the past four months, with the employment index rising above the 50-point mark and setting a new high since December 2020.

Confidence in the services sector remained strong in February. Entrepreneurs believed that customer demand will continue to recover as business conditions further return to normal, driving growth in business activity in the coming months.

Caixin manufacturing PMI also grew by 2.4 percentage points in February at 51.6, ending the previous contraction for six consecutive months. The rising indexes of services sector and manufacturing industry pulled the Caixin China composite PMI up 3.1 percentage points to 54.2 in the same month, the highest since the second half of 2022, signaling the continuous rebound of both production and business activity.

The trend echoed the data from the official National Bureau of Statistics (NBS) on Wednesday. The NBS said China's official manufacturing PMI in February rebounded by 2.5 percentage points to 52.6, hitting an 11-year high. The official services PMI bounced back to 55.6.

"The Caixin services PMI, together with the official PMI indexes, which all have better-than-expected performance, demonstrated the strong recovery of market economic dynamics from central enterprises to small and medium-sized enterprises," Cong Yi, a professor at the Tianjin University of Finance and Economics, told the Global Times on Friday.

These indexes will maintain above the 50-point mark in the coming months this year, Cong noted, adding that the mega market of China is a potential support force for the country's economic rebound, as China's purchasing power is gradually being unleashed after the optimization of antivirus policies.

The constant scheduling of new films is one of the most important signs of a market rebound. As of February 28, 2023, national urban cinema box office has reached nearly 14 billion yuan ($2.03 billion), with nearly 30 films scheduled for release in March.

China's Ministry of Commerce (MOFCOM) on Thursday said that enhancing consumer confidence and vitality is the primary task of promoting consumption. This year, the MOFCOM will work with the relevant departments, industry associations and business organizations to carry out a series of consumption activities, and create a strong consumer atmosphere to ensure the consumption boom of the whole year.

In addition, the ministry will recover and expand key consumption especially in the fields of vehicles, home appliances, home furnishings and restaurants, which account for a quarter of the country's consumption.

"However, the impact of the epidemic is significant and far-reaching and the foundation of economic recovery is not yet solid. Income and expectations are the basis and prerequisite for consumption, so in the coming period, relevant policies are required to focus more on increasing residents' income and improving market expectations," Wang noted.

Global Times