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China's services activity growth speeds up in March, Caixin PMI shows

Published 04/02/2024, 09:50 PM
Updated 04/02/2024, 10:28 PM
© Reuters. A view of the city skyline in Shanghai, China February 24, 2022. Picture taken February 24, 2022. REUTERS/Aly Song/File Photo

BEIJING (Reuters) - China's services activity growth accelerated in March as new business rose at the quickest pace in three months, a private-sector survey showed on Wednesday, a sign sentiment was staging a tentative recovery in the world's second-largest economy.

Together with other better-than-expected manufacturing surveys, the data add to evidence that parts of China's economy are gaining momentum in the first quarter.

The Caixin/S&P Global services purchasing managers' index (PMI) edged up to 52.7 from 52.5 in February, above the 50-mark that separates expansion from contraction for the 15th consecutive month.

Thanks to improving underlying demand and efforts to boost new orders, the pace of new business expansion was the fastest since December last year.

That also pushed up business confidence as the sub-index of future activity increased for the first time in three months amid hopes that new product lines, expansion plans and rises in client budgets will help boost sales.

However, better sales and business confidence failed to translate into higher recruitment. Employment levels shrank for a second successive month in March, though the rate of job shedding eased from February. According to respondents, resignations among staff and redundancies to improve productivity resulted in the fall in payroll numbers.

Taken together with the upbeat Caixin manufacturing PMI, the Caixin/S&P's composite PMI rose to 52.7 last month from 52.5 in February. It marked the highest reading since May 2023.

© Reuters. A view of the city skyline in Shanghai, China February 24, 2022. Picture taken February 24, 2022. REUTERS/Aly Song/File Photo

"Growth in supply and demand in both the manufacturing and services sectors accelerated slightly, with improved exports and sustained market optimism," said Wang Zhe, economist at Caixin Insight Group.

But he noted employment in both sectors continued to contract, while input and output prices remaining low, indicating that "sluggish demand persisted."

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