China's Caixin May Services PMI at 55.0... Strong Rebound

[Asia Economy Beijing=Special Correspondent Park Sun-mi] China's May Services Purchasing Managers' Index (PMI) recorded 55.0, showing a strong recovery in the service sector.

On the 3rd, Chinese financial information provider Caixin announced that China's May Services PMI stood at 55.0. This is a sharp rise from April's 44.4, reaching the highest level since October 2010. The PMI uses 50 as the baseline; a reading above 50 indicates economic expansion, while below 50 indicates contraction. The Services PMI had fallen to 26.5 in February due to the impact of COVID-19.

The recovery in China's service sector is attributed to the overall economic rebound following the COVID-19 crisis, which has invigorated new business activities within the domestic service industry.

However, despite the strong expansion in the service sector, the employment sub-index within the PMI still remains below the baseline of 50, indicating contraction. Wang Zhe, an economist at Caixin Insight, explained, "Most service sector companies are cautious about increasing employment, citing cost reduction and efficiency improvement as reasons," adding, "The employment situation in the service sector remains a concerning level."

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