Clear Improvement in China's Service Sector... Caixin PMI in Expansion Phase for 5 Consecutive Months

Manufacturing Industry Continues to Experience Sluggish Trend

Since transitioning to the With-Corona system, the improvement in China's service sector has become more pronounced. While the recovery of manufacturing has been delayed due to the impact of global demand slowdown, the difference in recovery speed is becoming more noticeable.

On the 5th, economic media Caixin reported that the May Services Purchasing Managers' Index (PMI), surveyed jointly with credit rating agency Standard & Poor's (S&P), was recorded at 57.1. This is an improvement of 0.7 points compared to the previous month and is the second highest figure since November 2020 (57.8). It also exceeded the previous month's figure (56.3) and market expectations (55.2).

[Image source=EPA Yonhap News]

The PMI is based on a survey of company personnel responsible for purchasing and human resources. If more respondents say that business conditions have improved compared to the previous month, the index rises above 50, indicating economic expansion; if fewer, it falls below 50, indicating economic contraction. The Caixin Services PMI, a private indicator, has been in expansion since January.

On the other hand, China's manufacturing sector continues to contract and shows a sluggish trend. On the 31st of last month, the National Bureau of Statistics of China announced that the manufacturing PMI for May was 48.8. This is 1 point below the market expectation of 49.8.

Wang Zhe, chief economist at Insight Group, Caixin's think tank, explained, "The strong service sector compared to manufacturing is a prominent feature of the Chinese economy," adding, "However, economic growth momentum is still insufficient, and market participants' confidence is not high." He further stated, "Expanding demand and recovery are important," and emphasized, "With poor employment conditions and accumulating deflationary pressures, active fiscal policies to stabilize employment and increase income should be prioritized."

This content was produced with the assistance of AI translation services.