Activity in China’s services sector expanded for a fourth straight month in April, although the pace softened from March.
(Bloomberg) — Activity in China’s services sector expanded for a fourth straight month in April, although the pace softened from March.
The Caixin China services purchasing managers’ index slowed to 56.4 in April from 57.8 the previous month, Caixin and S&P Global said in a statement Friday. That was lower than economists’ median forecast of 57.
Any reading over 50 indicates an expansion from the prior month, while a number below that suggests contraction.
“Both services supply and demand saw a boom last month,” Wang Zhe, senior economist at Caixin Insight Group wrote in a statement released with the data. Despite the slowdown from March, business activity and new orders remained strong, “suggesting that services activity was still undergoing a fast recovery,” he wrote.
China’s benchmark CSI 300 Index of stocks erased early gains and fell as much as 0.8% after the data. The lower-than-expected data together with other numbers released recently, “shows that recovery is not that strong,” said Steven Leung, executive director of UOB Kay Hian.
The recovery of the world’s second-largest economy has been lopsided, with demand for goods slowing as consumers increase spending on services such as travel and restaurants. Manufacturing activity contracted for the first time in months in April, official and Caixin PMIs showed, while domestic tourism surged over the Labor Day public holiday and boosted consumption to pre-pandemic levels.
The Caixin survey focuses on smaller firms compared to the official services PMI. That slowed to 55.1 from a record 56.9 in March, although it still indicates a strong expansion.
Economists expect the pickup in consumption to drive the economy’s recovery this year, with growth likely to reach 5.6% in 2023, according to the latest Bloomberg News survey. That’s above Beijing’s official target of about 5%.
–With assistance from Xiao Zibang and Shikhar Balwani.
(Updates with stock market reaction to the data in 5th paragraph.)
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