A businessman (left) from Georgia looks at trophies in Yiwu, East China's Zhejiang Province on April 8, 2024. With the Paris Olympic Games approaching, Yiwu has ushered in a peak season for the sale of sporting goods, with people from all over the world shopping for balls, flags and trophies in a wide range of stores. Photo: VCG

The Caixin China General Services Purchasing Managers' Index (PMI) came in at 54 in May, expanding for the 17th consecutive month and reaching its highest level since August 2023, while employment expanded for the first time since January, according to a private sector survey  released by Caixin on Wednesday. 

Chinese analysts said that the figure showcased a swift acceleration in China's services activity.

The index in May was higher than the April reading of 52.5, remaining in expansion territory and reaching its highest level since August 2023.

Driven by an accelerated expansion in supply and demand, particularly strong market demand, the services sector gained momentum in May.

The new orders index and the new export orders index both rose for a fourth consecutive month, indicating accelerating overseas demand.

"The services sector is now one of the main drivers of national economic growth. With a policy mix to stimulate market demand, the growth momentum is strong, as had been expected," Li Chang'an, a professor at the Academy of China Open Economy Studies of the University of International Business and Economics, told the Global Times on Wednesday.

Unlike April, when the index was boosted by faster supply and demand expansion, the services sector saw improved hiring, with the employment index hitting its highest point since October 2023 and ending a three-month decline, according to the survey. 

Companies reported that they were hiring more people to manage rising workloads. Heightened supply-side activity helped clear some backlog orders, the survey said. 

Prices rose modestly. Input costs and service charges increased at a limited pace. Due to previously low price levels, input costs reached the highest since June 2023 and service charges reached a new high since January 2022. The rise in input costs was driven by raw materials, salaries and transportation fees.

"Market sentiment remained optimistic. Surveyed companies were generally confident about future market prospects, although they expressed concerns over the global economic landscape and growing costs of raw materials. The corresponding gauge remained in expansion but below its historical average," Wang Zhe, a senior economist at Caixin Insight Group, said on Wednesday.

"We should remain optimistic. A slight rise in prices that can stimulate market vitality is not a bad thing at China's current stage. It may even be a sign of further economic recovery," Li said.

In the coming months, the services sector will continue its recovery and steadily improve, according to Li.

The Caixin China Manufacturing PMI for May increased by 0.3 points to 51.7, the highest since July 2022. Boosted by improvements in both manufacturing and services, the composite PMI for the month rose by 1.3 points to 54.1, according to previous data. 


Global Times