China services PMI hits 10-year high in June
The Chinese services sector grew at the fastest rate in more than a decade in June, according to data released on Friday.
The Caixin/Markit services purchasing managers’ index rose to 58.4 from 55.0 in May, coming in comfortably ahead of consensus expectations for a reading of 53.2 and marking the highest reading since April 2010.
A level above 50.0 signals expansion, while a reading below indicates contraction.
Total new orders rose at the quickest pace since August 2010 and new export work expanded for the first time since January. Firms widely reported that overall market conditions had continued to improve following an easing of measures related to the coronavirus pandemic.
Meanwhile, employment fell again, albeit modestly, with some firms noting staff had left roles voluntarily.
The survey also found that business confidence hit a three-year high in June amid forecasts of further increases in customer demand.
Wang Zhe, senior economist at Caixin Insight Group, said: "Although businesses were optimistic about the economic outlook, they remained cautious about increasing hiring, with employment in both the manufacturing and services sectors shrinking.
"Addressing the employment problem requires not only macro policies to further promote work resumption, but also more targeted relief measures introduced by governments to tide companies over."
Miguel Chanco, senior Asia economist at Pantheon Macroeconomics, said: "The June headline marks the strongest print in over ten years, on the back of the new orders component, which also hit a decade high.
"External demand was part of the rosier picture, with the new export orders sub-index rising above 50 for the first time since January. The employment sub-index took some shine off the results, however, as it remained in contraction, underscoring the building pressure on the household sector.”
Chanco said Friday’s data mirrors the outperformance of the Caixin manufacturing PMI over its official counterpart in June.
“The Caixin surveys, which better represent smaller, private firms, were underperforming in the months immediately after the end of China’s lockdown. This was partly because the official measures likely benefited significantly from the government leaning on state-owned enterprises to jump-start economic growth.
"Note that the earlier underperformance of the Caixin indices implied more favourable monthly base affects have flattered the recent surveys."